By: Ravi Sinha
Track2Realty Exclusive
The ruling of Competition Commission of India (CCI) against the market leader DLF seems to have not only sparked a debate within the real sector, but has also united them. The realty sector is collectively mulling over the idea of legal action against the CCI order. Failing to stick together on this, they are apprehensive, of further action on very many companies.
The real estate industry, already reeling under falling profit, high interest rates and steep input costs is extremely upset with the CCI ruling, which many say doesn’t come under its purview.
“Since there is no single regulator for the sector, everyone-right from the local police to the CCI-wants to regulate us,” said one of the developer who didn’t wish to be quoted.
The competition watchdog had recently imposed a penalty of Rs 630 crore on real estate major DLF over “abuse of dominant position” in relation to two high-end housing projects in Gurgaon. Delayed delivery of projects and changes in the building structure were among the charges levelled against the developer.
While DLF is contemplating legal action against the order, CCI may come out with similar orders against many other real estate companies.
Track2Realty has learnt that all developers are getting together to work out a joint strategy to combat this. They believe if the order has hit one company, it would affect others soon.
It is also learnt the government is sitting up on this issue, and may take steps soon to regulate the industry. A real estate regulatory bill has been pending with the government for a while. Most industry representatives are opposed to the proposed bill.
Industry stakeholders claimed the agreements between home buyers and developers were not one-sided and there was extremely limited scope of exploiting consumers.
National Real Estate Development Council has already said the industry is definitely together (on the issue), as the case would have implications on the sector as a whole. Builder-buyer agreements are being used by everyone, be it private players or the government development authorities.
Developers in Maharashtra, one of the biggest realty markets in India, said since agreements are drafted as in the Maharashtra Ownership of Flats Act, there is very little scope of exploiting buyers.
“Basically, there is a standard agreement described by the Act. Therefore, there cannot be violation which can come under the purview of CCI. It is mandatory to follow the Act,” said Lalit Kumar Jain, National President, Confederation of Real Estate Developers Association of India.
