By: Brotin Banerjee, MD & CEO, Tata Housing
Track2Realty Exclusive: The Real Estate Regulation Bill will define and clarify various concepts in the sector; this will bring in transparency and curb unfair practices. Following the trend seen in other sectors like telecom, banking, insurance etc, the Bill provides for creation of a separate Regulator and Appellate Authority. While it is expected to provide specialized regulation and enforcement, this should not become another regulatory in the ‘approval’ matrix.
The regulator should work more as a facilitator for the growth of the Sector. The Bill proposes to bring in mandatory registration of estate agents, a long due step, and this will help curbing money laundering. The provision of registration of all projects after getting approvals from development/municipal authorities but prior to sale may become another hurdle for the developers in the long term.
By mandating a public disclosure of all project details the bill aims to infuse transparency in the sector and increase consumer awareness. The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.
It aims to ensure consumer protection, timely completion of projects and prevent fund diversion. The Bill should have more provisions for promoting affordable housing projects in Tier II cities. Further, it should have pushed for including the housing sector in the infrastructure category. The Bill should acknowledge the importance of affordable housing needs for the rapidly urbanizing demographics in the country.
Another important bill is The Land Acquisition, Rehabilitation and Resettlement Act that will come into force from 1st January 2014. It has been passed a rightful entitlement. By making it an obligation for the government to make provisions for rehabilitation and resettlement it may become a major hindrance for builders to acquire and develop land. The provisions of undertaking a Social Impact Assessment for every acquisition will definitely slowdown the process of development in the long term. The impact of mandatory Environmental Impact Assessment has been a testimony to this fact in the last five years.
The provision of obtaining consent of 80 per cent of displaced people for private companies and PPP projects will dampen the prospects of investments; instead the Act should center on the concept of Joint Development where the developer forms a partnership with the land owner instead of buying land. This model has the ability to convert the land owners into stakeholders instead of a displaced population. Such a model is presently been followed by the Tata Housing. It has resulted in reduced conflicts and smoother transition through the process of land development.
With the rising number of PPP projects for development of physical infrastructure, the Act should not make discrimination between land acquired by the government and that done by the private sector. Streamlining the procedures for acquisition across sectors will enable all stakeholders a level playing field.
If the provisions of the bills discussed above are implemented in letter and spirit then the realty sector will see an image makeover. The governance of the sector can only be regulated by legislations but its public perception will improve only with more transparency and a focused ethical approach towards all deals and transactions.
Additionally, with real estate developers offering affordable and low-cost home, the demographic story of India points towards the middle class becoming a stakeholder in the realty sector very soon. The introduction of legislations stated above is expected to increase transparency and boost investor confidence in the Indian market.
