Who Really Earns in Real Estate?

Is it the builder?
The broker?
The proud buyer?
Or the government?

If you quietly guessed “government,” you’re already ahead of the class.

Because real estate in India has one silent, permanent beneficiary — the State.
Not because the State is wrong… but because the system is structured that way.

Let’s decode it step by step.

The Stamp Duty Loop: A Never-Ending Cycle

Picture a single flat in Pune, Bangalore or Mumbai.

It changes hands 5 times over 20 years.

Does the government:

• rebuild the road 5 times?

• provide electricity 5 times?

• redo drainage 5 times?

No.

But stamp duty gets charged 5 times.
Full. Fresh. Every single time.

Stamp duty and registration fees make the government the largest recurring beneficiary of real estate activity — without recurring expenditure.

Where Does Half the Money Go?

Take Mumbai as a textbook example.

For every new flat sold in redevelopment projects, nearly 50% of the sale value goes to the government through:

So, for a ₹2 crore apartment, roughly ₹1 crore is government revenue.

Builders absorb project risk, construction risk, financing risk, and regulatory delays.
Buyers take on loan risk, long-term liability, and maintenance.
But the government earns — every single time, with zero risk.

Again, these are not opinions.
These are documented financial flows.

The Cash Component: India’s Open Secret

No discussion about real estate is complete without acknowledging the cash component, which has historically existed across markets (though it is declining with digitization and RERA).

Here’s the simple factual reality:

• Cash transactions inflate property prices.

• They distort affordability.

• They reduce transparency.

• They create mismatch between “market value” and “circle rate.”

Due to this, sellers often price their property far above official valuation, making the formal economy look smaller and the actual cost for buyers significantly higher.

This is not a developer-bashing point.
Developers don’t control cash culture — the ecosystem does.
And the ecosystem is shaped by policy and tax structures.

Rental Yield: India’s Quiet Reality

One more fact about Indian real estate:

Rental yields are low — generally 2% to 3%.

Meaning, if a home worth ₹1 crore is rented out:

• Annual rent ≈ ₹2 lakh to ₹3 lakh

• Pre-tax

• Before maintenance

• Before society charges

• Before property tax

• Before occasional repair costs

After costs, the actual rental yield often dips below 2%.
This is simply how the Indian residential market behaves.
Not good, not bad — just factual.

It is one of the lowest rental yields among major global markets.

Unaffordability: The Big Elephant Nobody Talks About

The dream of buying a home is emotional, cultural, and aspirational — and yet the numbers reveal something stark:

• In Mumbai, the price-to-income ratio is 50:1 (one of the highest in the world).

• In Delhi NCR and Bangalore, it ranges from 12:1 to 20:1.

• Salaries have grown at 6–8% annually, while property prices have grown much faster in key micro-markets.

Result?

Homes are becoming larger financially, not physically.

A ₹1 crore home requires:

• ₹20–30 lakh down payment

• ₹70–80 lakh loan

• EMI of ₹65,000–75,000

• Plus maintenance, taxes, and periodic repairs

This puts natural pressure on middle-class households, even before they begin thinking about education, retirement, or medical expenses.

These are not opinions.
They are the mathematical structure of Indian real estate today.

So… Who Really Earns?

Let’s list the beneficiaries in clean factual order:

Every stakeholder earns something.
But the government earns consistently, whether market is up or down, whether buyer profits or not.

Now the Final Question: What Should We Do?

Not attack developers.
Not argue with brokers.
Not blame buyers.

Developers deal with:

• high land cost

• expensive premiums

• regulatory bottlenecks

• GST

• labour compliance

• financing pressure

• consumer expectations

And buyers deal with:

• EMI burden

• maintenance

• rising costs

• unaffordability

So where should the focus be?

If we want real estate to become transparent, affordable, and efficient…

our voice must be directed toward POLICY, not PROPERTY.

We need to question:

• Why stamp duty applies repeatedly at full rate

• Why premiums form 30–35% of project cost

• Why circle rates and market rates differ wildly

• Why rental yield is so low

• Why affordability keeps slipping

• Why cash culture still exists at the edges

• Why government earns the most with zero risk

Real estate will become truly healthy only when:

• transparency increases

• taxation becomes rational

• approvals become faster

• policy becomes predictable

• incentives reward compliance

• cash component is eliminated systemically

The conversation must shift from “builder vs buyer” to
“citizen vs structural inefficiency.”

Because the real estate market is not broken —
but the operating system needs an upgrade.

How does Mutual Funds help in your property matters?

• SIP in equity funds - helps you build corpus for downpayment, helps you channelise your low yield rentals into high growth wealth creation through mutual funds

• Liquid Funds - help you store the money for short term while you are making payments/receiving payments

• SWP from Hybrid Funds - helps you get regular cash flow at 6-7% if you happen to sell your property and want to preserve and grow the capital simultaneously receiving monthly income

Our role as a finance professional is not limited to your investments - it is also to give you peace of mind when you are in various phases of life. A good professional helping you is much better than a random Youtube/Podcast advice.

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Warm regards,

Tejas Lakhani