REAL ESTATE REGULATORY BILL 2 — Finlace Blog (Real Estate Consultant)
The Real Estate Regulation and Development Bill which has created much furore in the real estate sector is the most anticipated legal development in the industry. With the ongoing price correction and the spreading apprehension amongst buyers, the timing of this bill is perfect. With the bill soon expected to become legislation, the end users who have long been enduring the agonizing pangs of project delays and unfulfilled promises can finally heave a sigh of relief.
The Real Estate Bill will not only provide a uniform regulatory environment to protect consumer interests but will also speed up the adjudication of disputes to ensure an orderly growth and development of the real estate sector. The establishment of a regulatory mechanism in the form of Real Estate Regulatory Authority (ReRas) and Real Estate Appellate Tribunals will ensure the disclosure of all relevant information, layout plans, status of land and statutory approvals, etc mandatory bringing in the much required transparency for the customers. The registration of all promoters and agents with re regulators will make them accountable and will be subject to punishment in case of any delay or non-compliance. With the main aim of consumer protection, the bill is hoped to alleviate frauds and delays and restore the lost trust and confidence of the buyers in the real estate industry.
The 50% mandate will restrict the developers to divert the buyers’ advances elsewhere resulting in better adherence to timely deliveries and is hoped to minimize cost overruns. But some feel that this provision will make funding arrangements harder in an already cash-strapped developer community. The bill also mandates that the houses can no longer be sold on super area and the carpet area of all projects needs to be disclosed. Consequently, people will only pay for what they will live in. since the changes in the structure can only be made if agreed by two-third of the buyers, the consumers will get what they were promised. The inclusion of the commercial segment will further expand the regulatory scope and will benefit the industry. Furthermore, the sale of only registered projects will control the rise in prices. Also, the creation of a Central Advisory Council will ensure the proper execution and enforcement of the bill. The provisions of the real Estate Bill will enable access to financial and capital markets benefitting it in the long-term.
However, it is felt by many builders and consultants that some provisions of the bill may unbolt windows for corruption. Both the Prime Minister and Anshuman Magazine opine that the present form of the bill is not balanced. While the bill leaves no stone unturned for bringing in transparency, the non-inclusion of government agencies and authorities who are responsible for sluggishness in approvals are major reasons behind delays. And unless the bill does not make these authorities accountable, it will remain imbalanced. Getamber Anand, President, CREDAI, also fears that the bill might be misused by those in power. He also feels that the online registration and approval will render the whole process slow. The proposition of bringing the ongoing projects within the ambit of the bill will lead to confusion and would result in delays even in the projects that are nearly complete. The bill also does not provide title guarantees on land and there is no clear provision incase the builder abandons the project due to lack of funds and the consumers are likely to be hit. “The end result is that the Bill will be slightly protectionist towards buyers” commented Anuj Puri, Chairman and Country Head, JLL India.
While the Bill brings with it hope for the real estate sector, its effectiveness will largely depend upon its enforcement. And considering the present opaqueness and unregulated state of the sector, the Real Estate Bill is hoped to change the nature of the industry in the long run.
Originally published at finlace.com on April 16, 2015.