How Digitised Land Records and Property Registration Could Revolutionise India’s Real Estate
An article by Akhil Gupta, Co-Founder & CTO, NoBroker for SMEStreet highlights how Digital is transforming the Real Estate sector. "The industry started with greater adoption of video walkthroughs and artificial intelligence-powered apartment search listings before moving to AR/VR-based virtual property visits and fully digitized processes for home buying and renting," he writes.
When COVID-19 brought the world to a standstill, real estate players in India put together their digital might to reach customers. The industry started with greater adoption of video walkthroughs and artificial intelligence-powered apartment search listings before moving to AR/VR-based virtual property visits and fully digitized processes for home buying and renting.
It ultimately became clear that complete digitization of every aspect was the need of the hour for the real estate industry. For customers, such a change would ensure a seamless home buying or renting experience, transparent pricing, and fraud reduction. For the industry, on the other hand, it would be the stepping stone needed to meet a housing shortage of about 25 million units.
Land records and the property registration process are a crucial part of this ecosystem, and their digitization could revolutionize the real estate industry in India.
The common belief is that buying a property in India is a task fraught with the risk of corruption and fraud. This perception stems from the sheer volume of property disputes, litigations, and scams reported throughout the country.
More than malicious intent, however, most of these issues arise out of a more fundamental challenge: the way that real estate record-keeping is approached.
Traditionally, land records in India are maintained manually and managed at multiple bureaucratic levels. To complete documentation, a property buyer often goes through several agencies like municipal authorities for urban land records, the Revenue Department for mutations, the Registration Department for registration of transfer, etc. These agencies do not necessarily share information, making land records outdated and prone to fraud. The time and resource-intensive process also exposes home and business owners to corrupt officials and the risk of harassment.
To add to this challenge, India also lacks the necessary legal framework required to record the transfer of ownership titles. As a result, even bona fide property transactions do not guarantee property ownership. Lags also exist in land surveys, the introduction of title insurance, production of maps-to-scale, and the integration of textual and spatial records. Ultimately, land records remain poorly maintained, inaccessible, and, worse, presumptive.
The lack of transparency and the obstacle-ridden processes have long deterred domestic and NRI buyers from making property investments. Many are not even aware of the necessary steps involved in registering property and checking its history. Some people skip the property registration process altogether to avoid its high cost, which stems from stamp duty of up to 10%, and registration fees up to 2%.
Government initiatives to address challenges
Since the 1980s, the government has taken several steps to overcome these challenges. One of them is the Digital India Land Records Modernization Programme (DILRMP), launched in 2008, which aims to digitize all land records, maps, and survey and settlement records in a sustainable manner. If implemented efficiently, it could provide clear land records and make them accessible to government officials, property developers and platforms, and prospective buyers. It will also help integrate land record data across various departments, including information on litigations, reservations, transactions, mortgage, property tax, and encroachments.
Under DILRMP, more than 90% of land records were digitized in 23 States and Union Territories by the end of July 2020. The digitization of property registrations was also more than 90% completed in 22 States and UTs.
Another initiative is the Geographic Information System (GIS)-enabled land bank system launched by the government in August this year to map more than 3,300 industrial parks — spanning around 4,75,000 hectares of land — across 31 states and UTs. It aims to make land records accessible, provide investors with an array of information (like details of mortgage or claim against a property), simplify the process of land acquisition, and enable credible property registrations online. It is also capable of providing data-driven information on yearly trends and value analysis of a particular area.
Bottlenecks and wins
Despite the digitization ushered by DILRMP, progress on some of its components has been slow. Most villages have, for example, digitized existing land records but are yet to begin updating the information in real-time, creating knowledge gaps. The scheme also does not address the ambiguity around land ownership created by incomplete existing records.
Land surveying processes, which are crucial to updating land records, also require a significant technological upgrade. The tools available to many states are obsolete and cumbersome, while others do not even have access to this technology, leaving pockets of land left unsurveyed for decades. This year, the government has launched The Survey of Villages and Mapping with Improvised Technology in Village Areas (SVAMITVA) scheme to map rural areas using drones and satellites and address survey-related issues. Under it, landowners will also receive proof of property ownership rights through ‘property cards’ issued both physically and digitally over text messages.
Other success stories include the Bhoomi Project in Karnataka, under which 100% of land records have been digitized and made available through kiosks. The state has successfully eliminated middlemen from the process and provided landowners with clear records of rights. Rajasthan, meanwhile, has found a concrete solution for the land ownership problem with its Urban Land (Certification of Titles) Act, which makes the state government a guarantor for land titles and assures compensation in case of title disputes.
In fact, digitization of land records was brought on early on in Maharashtra. Today, the whole process is online. NoBroker annual real estate 2020 data also shows that over 80% of people in Maharashtra make their rent agreements online as well.
The way ahead
The country should take inspiration from Andhra Pradesh state, which has tied up with Swedish firm ChromaWay to use blockchain technology to prevent property fraud. Land record irregularities and mismanagement have held back the real estate sector in India for decades. A digitized ecosystem will help pave the way for accurate and detailed land data.
The resulting boost to property investments will prove significant to the economic growth of the country. Pacing up the process could prove beneficial, especially in light of the government’s recent consideration for 100% foreign direct investment in completed housing projects. The process will also pave the way for financial institutions to verify and record land ownership and mortgage information while making credit financing decisions.
The government will have to provide uniform, digitized, and registered property title documents that can serve as evidence of ownership and provide all information including site plans and property tax details. Setting up a digital record department could help in this regard. It will help the real estate industry ensure timely project completion and save costs of land disputes. It will even benefit the government by aiding its plans for industrialization and smart cities while dissuading landowners from evading property tax.
While India has made tremendous progress in the journey to digitize land records and property registrations, there is room for a lot more work. Despite being plagued by land issues, the real estate industry is expected to contribute a whopping 13% of GDP in India by 2025. Error-free, tamper-proof, and effortlessly accessible digitized land records could propel the industry towards exponential and sustained growth. Real estate platforms, for example, could integrate land records and registration processes as part of the services they offer and automate the process of buying and selling property with new-age technologies such as AI and blockchain. The process will save the government, real estate players, and customers time and money, build sector-wide trust and transparency, and translate into a boom in investments in the real estate industry.