Projects will be de­layed, say de­vel­op­ers

Builders not happy with some pro­vi­sions in the real es­tate bill, say launch­ing projects af­ter get­ting all clear­ances not fea­si­ble; es­crow ac­count ‘im­prac­ti­cal’

HT Estates - - NEWS - Van­dana Ram­nani

While most de­vel­op­ers have termed the pas­sage of the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Bill by the cab­i­net as a “wa­ter­shed de­vel­op­ment,” many claim that pro­vi­sions such as launch­ing projects af­ter get­ting statu­tory clear­ances can de­lay projects and that the gov­ern­ment should en­sure that the au­thor­i­ties send their ap­provals in time. They have also termed the pro­vi­sion of set­ting aside 70% of the amount in a spe­cific es­crow ac­count as “im­prac­ti­cal."

“The bill in its cur­rent form does not pro­vide any re­lief in terms of get­ting through the cum­ber­some ap­provals and per­mis­sions process in any ex­pe­di­tious man­ner,” points out Ge­tam­ber Anand, CMD, ATS In­fra­struc­ture and pres­i­dent (elect), Con­fed­er­a­tion of Real Es­tate De­vel­op­ers’ As­so­ci­a­tion of In­dia (CREDAI).

Reg­is­tra­tion with the reg­u­la­tor should be deemed sanc­tioned once ap­plied for to the reg­u­la­tory au­thor­ity. A 15-day lever will de­lay the ap­pli­ca­tion on flimsy grounds. Also, can­cel­la­tion of reg­is­tra­tion can be mis­used, Anand adds.

The bill en­vis­ages bring­ing forth a higher level of trans­parency and ac­count­abil­ity from the de­vel­oper com­mu­nity, which for long has been ei­ther self-reg­u­lated or work­ing on best prac­tices prin­ci­ples. It will help in­sti­tu­tion­alise the sec­tor, giv­ing it the nec­es­sary fil­lip to move to a new phase of growth and de­vel­op­ment. Hope­fully, this would also be a pos­i­tive step in the di­rec­tion of pro­vid­ing ‘in­dus­try sta­tus’ to the sec­tor - an­other long awaited de­mand of stake­hold­ers in­volved in real es­tate.

Anuj Puri, chair­man and coun­try head, Jones Lang LaSalle In­dia, says that though the list of dis­clo­sures to be fur­nished by the pro­moter is fairly ex­haus­tive, it could still be bench­marked against the best prac­tices of the de­vel­oped mar­kets so as to bring the real es­tate mar­kets in In­dia in more con­form­ity with such mar­kets where reg­u­la­tions have been ex­ist­ing for some time with rel­e­vant lessons to be learnt from their ex­pe­ri­ences.

Ac­cord­ing to Pankaj Bansal, direc­tor, M3M In­dia, “In prin­ci­ple, this is a wel­come and pro­gres­sive de­vel­op­ment ini­ti­ated by the gov­ern­ment of In­dia. How­ever, to en­sure an eq­ui­table im­ple­men­ta­tion of the pro­posed pol­icy, the gov­ern­ment, on its part, must also stream­line pro­cesses to en­sure bet­ter co-or­di­na­tion amongst the nu­mer­ous agen­cies in­volved in the ap­proval process at the lo­cal, state and cen­tral lev­els. There should be strict ac­count­abil­ity for timely clear­ances by gov­ern­ment func­tionar­ies, mea­sures to curb corruption and con­sis­tency in laid down pol­icy to en­sure speedy ap­provals. Lastly, it will ben­e­fit buy­ers, in­dus­try and the coun­try if the long-stand­ing de­mand to grant in­dus­try sta­tus is granted to the real es­tate and in­fra­struc­ture sec­tor. It is our sin­cere hope that the steps sug­gested will re­sult in a bal­anced ap­proach that ben­e­fits all and pe­nalises none.”

The bill in­tends to make it manda­tory for de­vel­op­ers to launch projects only af­ter ac­quir­ing all statu­tory clear­ances from rel­e­vant au­thor­i­ties and sell projects based on car­pet area.

The pro­posed leg­is­la­tion also has tough pro­vi­sions to de­ter builders from putting out mis­lead­ing ad­ver­tise­ments re­lated to the projects car­ry­ing pho­to­graphs of the ac­tual site. Builders and de­vel­op­ers will have to get all clear­ances - from ti­tle deed to project cost - cleared be­fore con­struc­tion be­gins. FAR (floor area ra­tio) will also have to be spec­i­fied clearly by the builder.

“Pro­vi­sions such as re­strict­ing launch of projects or ad­ver­tise­ments un­less all ap­provals are re­ceived, main­tain­ing sep­a­rate ac­count for cus­tomer monies, sale of projects based on car­pet area will in­deed help bring in trans­parency. Other pro­vi­sions such as manda­tory reg­is­tra­tion of projects (within 15 days) and reg­is­tra­tion of bro­kers are well-in­ten­tioned,” says Sachin Sand­hir, MD, South Asia, RICS, a UK-based self-reg­u­la­tory realty in­dus­try body.

An­shu­man Mag­a­zine, chair­man and man­ag­ing direc­tor, CBRE South Asia Pvt Ltd says, “The real es­tate reg­u­la­tor bill should have been more bal­anced, tak­ing a view of the chal­lenges faced by de­vel­op­ers and con­sumer griev­ances. While con­sumers need pro­tec­tion, for real es­tate de­vel­op­ment to hap­pen more ef­fi­ciently, and in a trans­par­ent man­ner, ad­min­is­tra­tive re­forms are re­quired ur­gently.”

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