Track2Realty Exclusive
For the last four years everyone within the built environment of Indian real estate, homebuyers included, wanted a real estate regulator but the consensus eluded.
There have been many changes since 2011 in the bill and yet it could neither make the developers nor the homebuyers happy with each side maintaining that it is not addressing their concerns. Walking a tight rope it seems the bill has this time around come closer to see a consensus and the analysts are hence keeping their fingers crossed so that finally a real estate regulator comes into the existence.
It seems the Government in its determination to reach a consensus has tried to address many grey areas this time around to restore consumer confidence and make it acceptable to all the concerned stakeholders. The question that still stands is what is the way forward now. Is the bill on its way to get the final hurdle cleared?
On part of the lawmakers, the union cabinet has approved 20 major amendments to the bill, accepting the recommendations of the select committee of Rajya Sabha that had examined the bill pending in the Upper House of the Parliament. These changes include mandatory registration of projects on 500 sq metres of area or with eight flats with the regulator, instead of earlier provision of 1000 sq meter, thus covering the larger number of projects.
The share of sale revenue to be put in the escrow account has also been increased from 50 per cent to 70 per cent. Another safeguard for the homebuyers is that builders will now have to pay equal rate of interest in case of delays as homebuyers. The liability of builders for structural defects has been increased from the earlier two to five years now.
Another contentious issue between the builder and the buyer – carpet area – has now been clearly defined to include usable spaces like kitchen and toilets, while car parking space has been separately defined. Formation of RWAs is now mandatory within three months of allotment of majority of units.
The new bill makes it clear that the aggrieved buyers can also approach consumer courts available at the district level instead of only the real estate regulatory authorities proposed to be set up under the bill.
Feeling that the changes are pro-consumers now, Sachin Sandhir, Global MD – Emerging Business, RICS says it will benefit end users greatly especially putting aside 70 per cent of the sale proceeds in an escrow account to meet construction cost. If effectively monitored, this will lead to faster execution and delivery of the projects which is a critical challenge in the real estate sector in India. While inclusion of real estate agents in the purview of regulation is a positive amendment, what remains critical is defining the eligibility criteria and standard code of conduct expected by agents.
“Clear rules will need to be laid down by state governments, in the absence of which dispute resolution would be difficult. Also, adding or amending the definition of carpet area to clarify useable area may not help much as it would differ from the definition given in national building code and other development laws. We believe only adoption of a uniform global standard for measurement for residential and office space will help bring transparency and standardisation.
Anshuman Magazine, CMD of CBRE South Asia believes this would be a game changer for the Indian real estate market. Not only will it protect the consumer, but also encourage the individual buyer, besides financial institutions, both domestic and international, to invest in the real estate market.
“The ease of doing business needs to be implemented in the real estate sector by making it easier for doing development by time bound approval mechanism by the government/local/ urban bodies. Therefore, the government bodies also need to be held accountable for ensuring reforms in archaic laws and timely project approvals,” says Magazine.
R.K Arora, Chairman, Supertech nevertheless has a clear suggestion here when he says the Regulatory Bill by the cabinet should also engage approving authorities so that the real estate project do not get delayed on getting approvals and timely deliveries can be given to the customers. This move will enable a boost in the realty sector as well as help increase investment figure in the industry.
“The approving authorities will help in sharing the desired time frame to sanction and completion of the projects in a timely manner. Also the regulatory authorities will encourage the single window clearance for real estate projects and assist in fostering the construction work which is an utmost important step in the amendment system,” says Arora.
In a nutshell, the built environment of Indian real estate has welcomed the amendment with certain riders. It is believed that the regulator bill would have addressed the concerns of both homebuyers as well as the developers had the approval mechanism and concerned authorities been made equally accountable.
The bill is nevertheless seen as the beginning of a transparent real estate market. It is to be seen whether the bill becomes a law this time around. That, after all, will define the way forward for the real estate regulator beyond the ambit of mere academic discussions.
