By: Sachin Sandhir, Managing Director-South Asia, RICS
Track2Realty Exclusive: In India the regulation bill has been contemplated for a few years, but it is only now being actively pursued through multiple rounds of industry consultation. As a tool to drive this initiative, the Ministry of Housing and Urban Poverty Alleviation (HUPA), has drafted a regulation bill laying down the necessary provisions to set up a regulatory body, defining its powers and functions, responsibilities of the developers and penalties for violations and RICS appreciates the initiative to further improve upon and facilitate a smoother introduction of the regulatory authority within the purview of the revised regulation bill.
However, while aspects such as regulation of building activity and property transactions and an appellate tribunal are being considered under the proposed legislation, the regulation bill still needs to take into consideration several other factors to ensure it is robust and effective mechanism.
At a recent RICS conference ‘Transforming the Indian real estate landscape 2020’, special emphasis was awarded to the role and scope of regulation in the realty sector in India. As per key discussions amongst industry leaders, developers, lenders, policymakers and government officials it was highlighted that real estate regulation in the country needs to prescribe a minimum standard of governance.
It was repeatedly advocated that we need regulation in the sector today, simply because there are no entry barriers and while self-regulation is a great professional practice it will have no meaning, if there are no barriers to entry in the sector where even today several fly-by-night operators tend to exist.
Therefore, as a step in the right direction the proposed real estate regulator should consider prescribing a minimum entry standard and regulation which is factored in at the enterprise level. Licensing at the company level, which is renewable on an annual basis might also be a better way at invoking regulation rather than monitoring/regulating every project that a developer undertakes.
As a roadmap for the future it was also suggested that regulation needs to have full market coverage with no biases. It needs to be an end-to-end process, which regulates a process rather than different stages of a process, as the latter only causes duplication and delays.
Additionally, the objective of the regulatory bill is to have satisfied customers, and this will take place only when the four parties involved in a transaction, namely developers, financial institutions, local authorities & service providers, and consumers fulfil their obligations in a development project and when all parties deliver what they are supposed to.
Therefore, to some extent consumer regulation also needs to form an integral part of the overall regulatory mechanism being proposed, where the practices of consumer are also governed.
Also, there needs to be greater clarity on the handling of consumer grievances. Regulation as a concept needs to be built on the premise that the most recurrent complaint against developers is ‘delay in the delivery of commitments’.
Given that consumer grievances are not effectively addressed in the present regulation bill – where at the state level the real estate authority has not been given any powers to adjudicate any disputes between the allottee and promoter but only to reconcile or mediate between the promoter, developer and allottee; there needs to be quick redressal system put in place to address consumer grievances and aide in information dissemination.
