Can realty be free from fraudulent practices?
Stakeholders in the real estate industry share insights on what the industry has set itself free from
Milestone birthdays are occasions to review, assess and introspect. As India turns 71 this Independence day, we ask a cross section of people on what is the one thing that the industry has finally freed itself of and what is the freedom it still yearns for!
According to 42 year old Gurgaon based management consultant Devansh Dutta- “The government has aggressively pushed a culture of transparency through measures such as demonetisation, Goods and Services Tax (GST), Real Estate (Regulation and Development) Act, 2016 (RERA) and Benami Property (Prohibition) Act. These landmark policy and legislative changes will eventually set the industry free from corrupt practices and help restore our confidence.”
For Samridhi Talwar who had invested in Noida in one of the projects that went in for Insolvency proceedings and liquidation and had feared the worst, the system did come to the rescue. “The projects seemed a far cry from completion. But when judiciary took a tough stand against big names such as Jaypee, Unitech, 3Cs, Amrapali our faith is restored. We yearn for freedom from such unscrupulous builders and this kind of example-setting should send a strong message to defaulters.”
She adds that the thing to cheer about and celebrate is the new Insolvency and Bankruptcy Code (IBC) whereby the NCLT treats homebuyers as financial creditors. “The government recently promulgated an Ordinance to amend the IBC and treat home buyers in ailing real estate companies on par with banks in the resolution process. This Ordinance empowers even a single home buyer to approach the National Company Law Tribunal to initiate insolvency proceedings against a realtor. This empowers the ordinary buyer and gives him teeth.”
Pending deliveries of past projects, has been a significant pain point in the last several years. According to a report by PropEquity, housing projects in India worth Rs 3.3 lakhs crores ($47 billion) are awaiting execution.
Many of these projects were launched 2009 onwards and most of these are delayed by eight years already, stalled at structure level and marketing of it has stopped.
According to PropEquity Founder and MD Samir Jasuja, “Freedom from unethical practices of some developers who tend to bring a bad name to the entire industry is the need of the hour.” He adds that fortunately, we are now witnessing green shoots of recovery for the projects which are not stuck and sales have increased for ready and nearing completion projects. Developers concede that there have been “quite a few rotten apples” and as Avneesh Sood, Director, Eros group says, “I think it’s time for us the developers to make the home buyers feel free from all the unpleasant notions that they have for the builders. With the introduction of RERA, it has helped us to break that notion. This Act has given wings of freedom to our homebuyers.”
Todays’ homebuyer, in a nutshell, looks forward to an industry that is professional and ethical, with focus on quality construction and timely delivery and is free from unscrupulous practices such as one sided contracts, delayed deliveries etc.
What is the freedom developer community has got so far? They have been liberated from hitherto held pre-conceived ideas of luxury and premium housing being the fashionable segment and the “status symbols” towards a more unbiased and practical approach of focusing on the mid-end and affordable housing segments. An investor frenzy in the early part of this decade inspired a prolonged focus of developers in launching lifestyle projects targeted at the premium segment at progressively higher prices. This later became unsustainable even as the market moved from an investor’s paradise to an end user market.
The notion of size of homes has undergone a sea change. There is freedom from earlier held notions of “the bigger the better” and “lifestyle homes” to “small but functional homes.” Today, small is beautiful. There has been a concerted effort by developers to decrease ticket sizes by constricting unit sizes and reducing prices in response to the market’s demands. It’s a period of stabilisation, right-sizing and right-pricing of new residential product, as a report from Knight Frank points out.
Moreover the government’s ‘Housing for All scheme by 2022 and the granting of infrastructure status to the affordable housing sector have also provided the necessary impetus to these under-rated and underserved segments of the market. The spokesperson from Ministry of Urban affairs says PMAY, the world’s largest housing programme of building 11 million affordable homes for urban Indians by the year 2022 is the highest-priority scheme as it brings the biggest change in the lives of the poor people by giving them their own house.