De­con­struct­ing the reg­u­la­tory bill

Project ap­proval pro­cesses will be faster but au­thor­i­ties will not be held accountable for de­lays

HT Estates - - FRONT PAGE - Van­dana Ram­nani

The Cabi­net has fi­nally cleared the real es­tate bill which had been pending for six years. It seeks to pro­mote a uni­form reg­u­la­tory en­vi­ron­ment and pro­tect con­sumer in­ter­ests by en­sur­ing trans­parency and fair play in real es­tate trans­ac­tions. Builders de­vel­op­ing a project ex­ceed­ing 1,000 square me­tre will now have to reg­is­ter with the reg­u­la­tory author­ity be­fore launch­ing or even ad­ver­tis­ing a hous­ing scheme.

Cabi­net cleared the pro­posal to set up a real es­tate reg­u­la­tory author­ity (RERA). All real es­tate projects and agents now have to be reg­is­tered with the Real Es­tate Reg­u­la­tory Author­ity. Func­tions and du­ties of pro­mot­ers and al­lot­tees are now made clear. Even gov­ern­ment agen­cies such as Delhi Devel­op­ment Author­ity and Na­tional Build­ings Con­struc­tion Cor­po­ra­tion, will have to reg­is­ter with RERA.

Ac­cord­ing to Ge­tam­ber Anand, pres­i­dent, Con­fed­er­a­tion of Real Es­tate De­vel­op­ers’ As­so­ci­a­tion of In­dia, reg­is­tra­tions will be done on­line and would be deemed to have taken place in 15 days but the reg­u­la­tor will sub­se­quently al­lot a user ID un­til which proper- ties can­not be sold. “How will deemed reg­is­tra­tion in 15 days help if you still have to wait for the lo­gin ID? Reg­is­tra­tions can also be can­celled if doc­u­ments are not found in or­der af­ter scru­tiny. This will open an­other win­dow for de­lay and di­lute the deemed con­cept.”

“The bill would have been more ef­fec­tive had all the ap­prov­ing au­thor­i­ties been brought un­der its purview. It should also pro­vide for hold­ing au­thor­i­ties accountable for de­lays in ap­proval pro­cesses that im­pact project time­lines,” says Shishir Baijal, chair­man and man­ag­ing direc­tor, Knight Frank In­dia.

Other re­forms such as digi­ti­sa­tion of land records, eas­ier land ac­qui­si­tion pro­ce­dures and faster en­vi­ron­men­tal clear­ances should also be looked into, says Anshuman Mag­a­zine, CMD, CBRE.

un­der-con­struc­tion projects have to be com­pul­so­rily reg­is­tered within three months of set­ting up of the reg­u­la­tor, and de­vel­op­ers would not be al­lowed to make changes to orig­i­nal plans or the struc­tural de­sign un­less they get the con­sent of two-thirds of the cus­tomers. “What­ever the builders com­mit in their brochures will now have to be ex­e­cuted. They may not be able to make

changes eas­ily,” says Deven­der Ku­mar of NEFOMA ( Noida Ex­ten­sion Flat Own­ers and Mem­bers As­so­ci­a­tion).

have to set up reg­u­la­tory bod­ies within one year of the bill’s en­act­ment and, af­ter an­other year, set up a web-based on­line reg­is­tra­tion fa­cil­ity.

penalty: Fail­ure to reg­is­ter a project will cause the de­vel­oper to at­tract a penalty of 10% of the over­all project cost, and an ad­di­tional penalty of 10% and/or a three-year pri­son term in case of con­tin­ued non-com­pli­ance. In­cor­rect or in­com­plete dis­clo­sures will at­tract a penalty of 5% of the project cost. Project can­cel­la­tion has been stated as pos­si­bil­ity in case of con­tin­ued non-com­pli­ance.

ear­lier bill had man­dated that a de­vel­oper put 70% of the buyer’s in­vest­ment into an es­crow ac­count that would be used only for the con­struc­tion of that project, which has been brought down to 50% Ac­cord­ing to Anuj Puri, chair­man & coun­try head, JLL In­dia, this amount from the money col­lected from the buy­ers must be placed in an es­crow ac­count within 15 days. This pro­vi­sion will ef­fec­tively al­low de­vel­op­ers to con­tinue their prac­tice of di­vert­ing funds col­lected for a project to­wards land ac­qui­si­tion or other projects, and will work in their favour by also al­low­ing them to grow their land and/or project port­fo­lio. How­ever, the 50% man­date will still place enough re­stric­tions on de­vel­op­ers to di­vert funds else­where and en­sure bet­ter com­ple­tion records. For the buy­ers, the con­cerns re­gard­ing funds di­ver­sion will be higher now.

Supreme Court ad­vo­cate SK Pal says the es­crow per­cent­age can be fur­ther re­duced or in­creased, depend­ing on cost of land, by the state gov­ern­ments as real es­tate is a state sub­ject. For ex­am­ple, if a builder pays an amount up­front to ac­quire land, this per­cent­age is fine but if has to pay, say ₹ 25 crore, spread across five years (which is ₹ 5 crore a year), this per­cent­age will only leave room for di­ver­sion of funds. There­fore, this per­cent­age should be de­pen­dent on how the land is pro­cured for a project. The bill should also de­fine clearly what con­sti­tutes “wil­ful de­fault” by builder, oth­er­wise it will lead to lit­i­ga­tions. Pal says the bill should have clearly called for en­force­ment of a model builder-buyer agree­ment. In­stead, it only men­tions that the doc­u­ment should be close to the model agree­ment, leav­ing room for mis­use.

this bill, buy­ers can knock the doors of any other con­sumer fo­rums. In case the buyer is not sat­is­fied with RERA’s de­ci­sion they can ap­proach the ap­pel­late tri­bunal. One is­sue pointed out in the bill by stake­hold­ers was that it aimed to place it­self as the sole course of ac­tion for re­dres­sal of griev­ances or cus­tomers, who will have no re­course to other con­sumer fo­rums. It was cor­rectly pointed out that such a stance could lead to pres­sure on this reg­u­la­tory body in terms of an in­creased log of cases. As per the bill, cus­tomers can now seek help from other con­sumer courts and fo­rums as well.

projects which have not re­ceived com­ple­tion cer­tifi­cates will be now cov­ered un­der the bill. What this means is that if a builder’s project has not been com­pleted or has not re­ceived a com­ple­tion cer­tifi­cate in five to six years, it will still be con­sid­ered in­com­plete and fall un­der the ambit of this bill. Cre­ation and man­age­ment of a smart city per­haps lies in lo­cal ( city) agency domain since lo­cal gov­er­nance is their man­date and it is in their hands to demon­strate smart gov­er­nance. This means that devel­op­ment and long-term vi­sion re­gard­ing tech­nol­ogy-driven public util­i­ties and their ac­cep­tance by the public be­comes the re­spon­si­bil­ity of the lo­cal gov­ern­ment agen­cies. The cur­rent mu­nic­i­pal op­er­a­tions need to un­dergo a sys­temic over­haul to get around cre­at­ing a ‘sus­tained smart’ city ar­chi­tec­ture. This re­quires not only ac­cep­tance of tech­nol­ogy as a means to reg­u­late public ser­vices and city in­fra­struc­ture but also re­quires a sus­tained in­vest­ment en­vi­ron­ment into such tech­no­log­i­cal plat­forms.

Ca­pac­ity build­ing in mu­nic­i­pal gov­er­nance and lo­cal self­gov­ern­ment de­part­ments is needed across all lev­els. Lo­cal bod­ies can in­vest in such tech­nol­ogy is through en­cour­ag­ing pri­vate en­ter­prises which have such plat­for ms ready for in­te­gra­tion at a city level. Im­ple­men­ta­tion and run­ning costs need to be cov­ered through an ef­fi­cient tax col­lec­tion sys­tem and in­no­va­tive fundrais­ing to en­sure long-term in­vest­ments and rel­e­vant up­grades.

The role of the lo­cal agen­cies hence be­comes para­mount in this re­gard. Swifter de­ci­sion­mak­ing, cut­ting across time de­lays and defin­ing roles and re­spon­si­bil­i­ties of in­volved stake­hold­ers be­comes an ev­i­dent need. Sim­i­larly, train­ing of per­son­nel and main­tain­ing the tech­nol­ogy plat­forms through con­tin­u­ous en­gage­ment also rests on the shoul­ders of the mu­nic­i­pal agency. Cre­at­ing longterm tech­nol­ogy in­fra­struc­ture to en­able real-time data avail­abil­ity and anal­y­sis and en­abling re­dun­dan­cies to cre­ate mul­ti­ple neu­ral net­works which de­volve in to the mas­ter net­work also be­comes para­mount.

The fund al­lo­ca­tion and sys­tem­atic de­ploy­ment of re­sources also falls in the purview of th­ese agen­cies. Cre­at­ing smarter city level in­fra­struc­ture across roads, sewage, wa­ter, trans­port, traf­fic, waste man­age­ment, power, en­ergy sav­ings, air qual­ity mon­i­tor­ing and in­for­ma­tion avail­abil­ity are all do­mains which re­quire an in­creased level of par­tic­i­pa­tion, un­der­stand­ing and ex­per­tise in our lo­cal gov­ern­ment frame­work.

Tech­nol­ogy as an en­abler

Tech­nol­ogy forms the back­bone which pro­vides the struc­ture and form to a smart city. Cre­at­ing in­ter­ac­tive and on­line plat­forms to en­cour­age in­no­va­tion and par­tic­i­pa­tion of all stake­hold­ers and en­gag­ing with pri­vate en­ter­prises who are lead­ers in tech­nol­ogy-driven so­lu­tions is es­sen­tial to bring about a sus­tained change in the live­abil­ity of a city. Trans­for­ma­tive pos­si­bil­i­ties abound with utilisation of big data and an­a­lyt­ics in­stead of us­ing the same look­ing glass of treat­ing in­for­ma­tion in com­part­ments.

The need is to cre­ate a sys­tem of sys­tems, into which is fun­nelled the data that is col­lab­o­rated from the dif­fer­ent agen­cies. In­no­va­tions such as cloud-based so­lu­tions and pre­dic­tive an­a­lyt­ics are great value en­hancers which to­day al­low a city to de­vise for­ward-look­ing so­lu­tions and en­able cre­ation of a sus­tain­able city en­vi­ron­ment and its re­sources.

In­vest­ing in such tech­nolo­gies along with the cur­rent in­crease in mo­bile data an­a­lyt­ics and so­cial me­dia par­tic­i­pa­tion to in­volve the cit­i­zens will al­low a syn­ergy of ef­forts which the main sys­tem will be able to utilise ef­fec­tively to bring about de­fin­i­tive changes in how we live in our cities.

While tech­nol­ogy has per­vaded all as­pects of our lives, the next in­evitable step is to in­crease its pen­e­tra­tion across all sec­tions of the de­mog­ra­phy. User sen­si­ti­sa­tion to­wards use of tech­nol­ogy stems from mak­ing users con­ver­sant and com­fort­able with the tech­nol­ogy plat­forms. Tech­nol­ogy has the abil­ity to en­able con­ver­gence be­tween the var­i­ous stake­hold­ers to cre­ate a mod­ern, dy­namic and throb­bing living ecosys­tem in our cities.

Bet­ter peo­ple in­ter­face

The crit­i­cal com­po­nent is the users. The con­tri­bu­tion of ed­u­ca­tion, train­ing and a yearn­ing to learn and con­trib­ute ac­tively to­wards their living con­di­tions, is what al­lows a smart city to live and sus­tain through its cit­i­zens. As cit­i­zens, we need to be more ac­cept­ing of di­ver­sity and new tech­nol­ogy to make a big con­tri­bu­tion to­wards mak­ing our cities smarter.

As tech­nol­ogy changes the way we live, util­is­ing so­cial me­dia as a change driver, be­ing self- aware and par­tic­i­pat­ing through in­ter­ac­tive so­lu­tions and as­sim­i­lat­ing tech­nol­ogy into the way one lives be­comes cru­cial in defin­ing one’s living en­vi­ron­ment. Em­brac­ing new changes and in­no­va­tions and con­tribut­ing to­wards fos­ter­ing open-mind­ed­ness through evolv­ing thought is the duty of cit­i­zens and with­out this change in psy­che, im­ple­men­ta­tion of smart cities will not be com­plete.

A smart city by in­fer­ence will thus al­low for ef­fi­cient use of in­fra­struc­ture and the city’s re­sources. An in­crease in trans­parency lev­els across de­ci­sion­mak­ing, polity, re­source al­lo­ca­tion and cit­i­zen rights and re­spon­si­bil­i­ties will in­evitably re­sult and en­able weed­ing out of red tape and cor­rup­tion which act as im­ped­i­ments to main­tain­ing the bal­ance be­tween sus­tain­abil­ity and devel­op­ment.

An In­dian ex­per­i­ment

In the In­dian con­text, the cur­rent gov­ern­ment has an­nounced its in­ten­tion of set­ting up 100 smart cities. This im­por­tantly seeks to cre­ate a smarter city on the ex­ist­ing cities’ frame­work. Im­prov­ing the ex­ist­ing cities is def­i­nitely a step in the right di­rec­tion. In­ten­sive cap­i­tal bud­get­ing is re­quired for im­ple­men­ta­tion of such smart cities in the coun­try. As the en­gine of eco­nomic devel­op­ment chugs along, cities are the real growth en­ablers act­ing as mag­nets for em­ploy­ment and in­vest­ments. Cre­at­ing a sus­tain­able living en­vi­ron­ment, which will make cities grow in a bet­ter and planned man­ner while bear­ing the strain of ur­ban­i­sa­tion, thus be­comes im­per­a­tive. It is es­sen­tial that a clear im­ple­men­ta­tion roadmap which out­lines the ob­jec­tives, the var­i­ous stake­hold­ers and iden­ti­fies the fund­ing mech­a­nisms is put in place.

It also be­comes cru­cial that this op­por­tu­nity is not in­ter­preted as only real es­tate led devel­op­ment of com­mer­cial of­fices and hous­ing projects; in fact real es­tate is both the cause and re­sult of smart cities in a way. While eco­nomic driv­ers are para­mount for the city’s sus­tain­able growth, the fo­cus should be on cre­at­ing the re­quired phys­i­cal in­fra­struc­ture and im­ple­ment­ing tech­nol­ogy driven plat­forms which will al­low a seam­less in­ter­change of in­for­ma­tion and man­age­ment of the city’s re­sources.

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