Union Cabinet approves the Real Estate (Regulation and Development) Bill, 2015, a move toward creating a more consumer friendly, transparent and accountable real estate sector.
New Delhi: India moved a step closer to creating a more consumer friendly, transparent and accountable real estate sector on Wednesday after the Union cabinet approved the much delayed and anticipated Real Estate (Regulation and Development) Bill, 2015.
The bill envisages the creation of a regulator for the real estate sector who is empowered to penalize and prosecute errant developers. It will be presented to Parliament during the ongoing winter session.
The move is expected to restore consumer confidence in real estate, potentially triggering a revival in the sector.
“This is a step in the right direction. It will go in favour of consumers as well as developers who do clean business,” said Anuj Puri, chairman, Jones Lang LaSalle (JLL) India, a real estate advisory, adding that this will bring in transparency to the sector that will also attract foreign direct investment (FDI).
“If you look at markets such as the UK and Australia, they attract huge FDI in housing as they are transparent,” he added.
According to JLL’s global transparency index, India figures somewhere in the middle, around the 44th position in a survey of 90 countries. China, which was behind, has now moved ahead to the 35th position.
Arguing similarly, Sanjay Dutt, managing director, Cushman and Wakefield India, a property advisory, said a regulatory bill will revolutionize the Indian real estate sector and bring it on par with those in developed nations.
“This will bring in some entry barriers, which didn’t exist till now, making the business speculative,” Dutt said. “However, it is pertinent that the government too helps in implementing this bill by making state governments accountable and making the approval process simpler and faster.”
The bill, according to an official statement, aims to enhance the credibility of the real estate sector by restoring confidence of consumers in the sector, promote transparency and accountability, and encourage orderly growth through efficient execution of projects, professionalism and standardization.
Among the major recommendations is the mandatory registration with real estate regulatory authorities of projects of at least 500 sq.m area, or eight flats, instead of 1,000 sq.m, or 12 flats, proposed earlier. This enables registration of more projects with the regulatory authority and will protect more consumers.
Project developers will also now be required to deposit at least 70%, including land cost, in a separate escrow account to meet the cost of construction. Their inability to do so has affected thousands of customers across the country, and also resulted in poor demand for new housing projects.
Regulatory authorities can register projects to be developed beyond urban areas, promote a single window system of clearances, and grade projects and promoters besides ensuring digitization of land records. They will also have to draft regulations within three months of formation, from the six months proposed in an earlier version of the Bill.
Among the changes made to the Bill from its earlier version in December 2014 is a provision for imprisonment up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of appellate tribunals or monetary penalties or both.
Appellate tribunals will be required to adjudicate cases in 60 days as against 90 days proposed earlier and regulatory authorities will have to dispose complaints in 60 days while no such time limit was indicated earlier.
Irfan Razack, president, national, of industry body Confederation of Real Estate Developers’ Association of India, said that while the intent of the bill is good, it leaves a lot of scope for confusion.
Courtesy: LiveMint | 11-December-2015