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’
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.”