The Confederation of Real Estate Developers’ Associations of India has expressed displeasure about the proposed Model Real Estate (Regulation of Development) Act in its present form, saying it could lead to an escalation of prices of housing stock in the country by Rs 300 per sq ft. The bill would be placed before Parliament soon.
CREDAI believes that it is a draconian bill aimed at strangulating developers alone, CREDAI vice-president Prakash Challa said, “We are not opposed to having a legislation to regulate the real estate sector. But the proposed legislation, in its present form, would be detrimental for the industry. If the cost of projects go up, the sufferers will be the end customers. Real estate is already an overly regulated sector. The best way to make housing affordable to all is to liberalise the sector by introducing a single window clearance system for projects, clubbed with a rationalized tax system. The very concept of affordable housing will be a failure if cost escalates by roughly Rs 300 per sq ft on account of introduction of the regulatory bill.”
Challa said the bill would lead to multiplicity of procedures, which would result in enormous delay in starting residential projects, leave alone completing them. He said even after the builder obtains all statutory approvals from the existing regulatory agencies like the Chennai Metropolitan Development Authority, the Directorate of Town and Country Planning and the environmental department (for big projects), the proposed bill says the builder will have to get clearance from a new regulatory authority. It would only delay works, he said.
The bill also wants the builder to open an ESCROW account and maintain the entire funds required for construction of the project in that account.Challa noted that while the bill prescribed imprisonment for the builder who is not able to provide basic services like power, water and sewerage connections on time, it was silent on what punishment would be meted out to the service providers like TNEB and Metrowater Board if they delayed giving connections. “If the bill is implemented in the current form, even for the service providers’ fault, the builder can be imprisoned,” he lamented. Also, the bill does not prescribe any penalty for the delay caused by the regulatory agencies (CMDA and DTCP for example) in giving approvals for the project, he added.
