What do 71 years of in­de­pen­dence mean for In­dia’s realty in­dus­try?

HT Estates - - FRONT PAGE - The au­thor is Chair­man – ANAROCK Prop­erty Con­sul­tants Anuj Puri let­ters@hin­dus­tan­times.com The au­thor is Chair­man – ANAROCK Prop­erty Con­sul­tants

In case of project de­lays, buy­ers have the right to - (i) Seek with­drawalof­book­ing(the de­vel­oper is liable to re­fund the en­tire amount along with in­ter­est) (ii) Go ahead with the project (with the con­di­tion that de­vel­oper will pay in­ter­est for ev­ery month of de­lay un­til the prop­erty is ready for pos­ses­sion). The max­i­mum time for re­fund­ing the buyer’s in­vest­ment is within 45 days of it be­com­ing due.

2. Fa­cil­ity to check RERA reg­is­tra­tion num­ber

All builders have­tomanda­to­rily reg­is­ter their projects un­der RERA with the re­spec­tive state reg­u­la­to­ryau­thor­ityan­dob­taina reg­is­tra­tion num­ber for ev­ery project. With­out RERAreg­is­tra­tion, de­vel­op­ers are not al­lowed to sell the project. The project de­tails, construction progress, com­mence­ment/oc­cu­pa­tio­nand other cer­tifi­cates, sales de­tails, etc. must­be­up­date­donthesin­gle­point in­for­ma­tion win­dow i.e. RERA­por­tal, atreg­u­lar­in­ter­vals.

3. Fi­nan­cial safety via an es­crow ac­count

Home­buy­ers’in­vest­mentscanbe con­sid­ered­safe, asRERAobliges de­vel­op­ers to de­posit at least 70% of the­buy­ers’mon­eyre­ceived­for a par­tic­u­lar project into an es­crow ac­count. This pre­vents the de­vel­op­ers from ‘rolling’ these funds into other projects. The rolling of funds was a ma­jor rea­son for project de­lays in the past.

4. Abil­ity to ver­ify the builder’s track record

Buy­ers can now opt for prop­er­ties on­lyfrom­re­puted­de­vel­op­ers who are com­ply­ing with RERA norms and have a good track record and fi­nan­cial sta­bil­ity, which can be ver­i­fied by buy­ers.

5. Trans­parency in ad­ver­tise­ment and mar­ket­ing col­lat­er­als

De­vel­op­ers can now pro­mote a project only af­ter reg­is­ter­ing it with RERA. The unique RERA reg­is­tra­tion num­ber has to be pub­lished with ev­ery ad­ver­tise­ment/brochure, ori­nanykindof project pro­mo­tion at all.

6. Clar­ity on car­pet area

The­hith­erto con­ven­tional prac­tice of de­vel­op­er­scharg­inghome­buy­ers on the ba­sis of the su­per built-up area no longer works. Un­der RERA, the quoted price has to be manda­to­rily based on the car­pet area of the prop­erty. Whaty­ouseeiswhaty­ouget(and buy).

7. Strict norms on build­ing changes

Around2/3rd of the buy­ers’ con- sent in apartic­u­lar project is nec­es­sary in case the de­vel­oper in­tends to mod­i­fythe­build­ing or lay­out plans/spec­i­fi­ca­tions/li­a­bil­i­ties in the project.

8. Fa­cil­ity to check pay­ment plans

Home­buy­er­scan­do­duedili­gence be­fore­opt­ing­fora­partic­u­lar­pay­ment plan, a va­ri­ety of which de­vel­op­ers now of­fer - in­clud­ing flexi-pay­ment, down-pay­ment, pos­ses­sion-linked and­con­struc­tion- linked plans.

9. Book­ing amount can­not ex­ceed 10%

De­vel­op­ers can only take 10% of the to­tal prop­erty cost as a book­ing amount while the sale agree­ment is drafted at later stages. RERA pro­hibits de­vel­op­ers to ac­cept morethanthis. If guilty of charg­ing more than 10%, the de­vel­oper po­ten­tially in­vites a penalty of im­pris­on­mento­fupto 3 years.

10. Bro­kers must be reg­is­tered un­der RERA, too

Asser­vi­ce­provider­sto­re­alestate con­sumers, prop­er­ty­bro­ker­sare also liable for all de­liv­er­ables com­mit­ted­bythede­vel­op­er­s­they rep­re­sent. Hence, they mus­treg­is­ter them­selves with their re­spec­tive state Reg­u­la­tory Au­thor­i­ties.

11. At long last, a re­li­able re­dres­sal mech­a­nism

RERApro­videsas­tron­gre­dres­sal mech­a­nism to con­sumers by im­pos­ing a penalty on de­vel­op­ers/bro­kers for any breach of obli­ga­tion. Home­buy­ers can file com­plaints against de­vel­op­ers/ bro­kers which will manda­to­rily be re­solved in a span of 60 days from the date of the com­plaint.

12. Struc­tural de­fects must be addressed

In case of is­sues within the build­ing or apart­ment, such as in­ef­fi­cient plumb­ing, vis­i­ble cracks, etc. in the ini­tial five years af­ter pos­ses­sion, de­vel­op­ers are liable to rec­tify the de­fect in less than30 daysorelse­givecom­pen­sa­tionto the buyer.

13. Avail­abil­ity of land ti­tle doc­u­ments

These vi­tally im­por­tant doc­u­mentswere, more­of­ten­thannot, in­ac­ces­si­ble to buy­ers be­fore RERA. Now, they can scru­ti­nize doc­u­ments re­lated to a project’s landti­tle own­er­shipon­theRERA web­site.

14. Good­bye to soft/pre­launches

RERA has put a com­plete halt to soft launches, pre-launches and anyother in­ter­pre­ta­tions of sell­ing­some­thing­which­doesn’tex­ist as yet. As a re­sult, spec­u­la­tors have now been pushed out and the­mar­kethas­turnedex­tremely buyer-friendly.

While many states are still in the process of no­ti­fy­ing their RERA rules, there has been con­tin­u­ous fret­ting about the di­lu­tion of the rules re­cently no­ti­fied by many states. There are mul­ti­ple changes made by dif­fer­ent states in the RERA pro­posed ini­tially by Cen­tral Gov­ern­ment. Di­lu­tion­i­non­go­ing­pro­jects’definitions has left a huge num­ber of projects out of the RERA am­bit and is un­der­stand­ably a ma­jor con­cern for ex­ist­ing buy­ers. To keepthes­pirit of RERAalive, the Gov­ern­ment should try to keep RERArule­salignedan­d­ef­fec­tive across all the states, while bal­anc­ing the in­ter­ests of both buy­ers and de­vel­op­ers. In the 71 years since In­dia gained in­de­pen­dence, the coun­try’s real es­tate mar­ket has changed tremen­dously. While it has not al­ways been con­sumer-favour­ing through­out this pe­riod, it is cer­tainly so to­day. The­coun­try’s cities have ex­panded, new eco­nomic driv­ers have come in and jobs are be­ing cre­ated at all lev­els.

Like­wise, ap­pro­pri­ate hous­ing is now be­ing cre­ated for all in­come lev­els. The cur­rent Gov­ern­ment has taken the needs of the peo­ple to heart and de­ployed var­i­ous pol­icy ini­tia­tives to en­sure that home­own­er­ship be­comes af­ford­able and de­sir­able.

Like the real es­tate mar­ket it­self, the mar­ket for hous­ing loans has be­come very com­pet­i­tive, giv­ing con­sumers the edge of choice. More­over, prop­erty prices have also ra­tio­nal­ized across the coun­try af­ter the Gov­ern­ment’s de­mon­e­ti­za­tion move late last year.

While it was ini­tially ex­pected that only the re­sale homes and land mar­kets would be af­fected, it quickly be­came ev­i­dent that the low­ered sen­ti­ment had per­co­lated in pri­mary sales as well.

Many of the most im­por­tant changes to pos­i­tively im­pact home buy­ers in In­dia so far have been at the pol­icy level, while oth­ers have been in­duced by ad­vances in tech­nol­ogy:

The In­ter­net has opened up the abil­ity for ev­ery­one to do their own ba­sic re­search and short­list lo­ca­tions, projects and prop­er­ties that suit their needs

Hous­ing loan in­ter­est rates are hard­en­ing, but if we con­sider that they were as high as 16% per an­num in the ‘90s, they are still quite at­trac­tive

Buy­ers’ bar­gain­ing power is at an all­time high to­day

RERA is clear­ing fly-by-night op­er­a­tors from the mar­ket, leav­ing only cred­i­ble and re­li­able play­ers who are bound by law to ad­here to their as­sur­ances on­the mar­ket

The econ­omy’s open­ing up with a plethora of new em­ploy­ment op­por­tu­ni­ties has, among other things, also led to the emer­gence of dual-in­come nu­clear fam­i­lies with vastly en­hanced home buy­ing abil­i­ties

Buyer sen­ti­ment to­day

For a long time, In­dia’s in­de­pen­dence did not have too many favourable con­no­ta­tions for as­pir­ing home buy­ers. Their dis­ad­van­ta­geous po­si­tion had a lot to do with the fact that the real es­tate mar­ket was largely held hostage by de­vel­op­ers. To­day, this sce­nario has changed sig­nif­i­cantly. Over the past two years, we have seen the de­ci­sive re­turn of con­sumer power on the mar­ket, with the ar­rival of the Real Es­tate Reg­u­la­tory Act (RERA) pro­vid­ing the fi­nal edge.

While RERA is still ex­pe­ri­enc­ing teething trou­bles, it is for cer­tain that it is here to stay - fi­nally putting buy­ers firmly in the driver seat. The Act is by far the most con­vinc­ing man­i­fes­ta­tion of in­de­pen­dence for home buy­ers in mod­ern-dayIn­dia, promis­ing to even­tu­ally bring the res­i­den­tial prop­erty mar­ket on par with in­ter­na­tional stan­dards of trans­parency and ac­count­abil­ity to con­sumers.

THE IN­TER­NET

HAS DONE A LOT MORE THAN JUST OPEN UP THE IN­DIAN REAL ES­TATE MAR­KET’S TO­POG­RA­PHY.

A game­changer called GST

GST is a ma­jor step to­wards fi­nan­cial trans­parency, which can be read as free­dom in the con­text of real es­tate if we con­sider the pre­vi­ous com­plex and often opaque lay­ers of tax­a­tion which ap­plied to real es­tate pur­chase as bondage. Most of the pre­vi­ous taxes have been con­sol­i­dated un­der this one tax, and, hav­ing greater clar­ity about how much the fi­nal price of buy­ing a home frees the mind from un­cer­tainty. GST is a clear man­i­fes­ta­tion of a rapidly evolv­ing na­tion which in­tends to make it­self more at­trac­tive to con­sumers as well as for­eign in­vestors. Its im­ple­men­ta­tion was­notwith­out a strug­gle, but it was a clear need in a coun­try which wants to por­tray it­self as pro­gres­sive, open and ac­count­able. In that sense, it is cer­tainly a sym­bol of lib­er­a­tion.

As a clear work in progress, GST is still in the throes of its own ‘ free­dom strug­gle’ as it as­pires to live up to the ‘ one na­tion, one tax’ prom­ise. One of the ma­jor hall­marks of a fully de­vel­oped na­tion is a trans­par­ent, fair and pro­gres­sive fi­nan­cial sys­tem. As a de­vel­op­ing rather than a fully-de­vel­oped coun­try, In­dia must as­pire to­wards global bench­marks of pro­gres­sive­ness, and GST is in­du­bitably a ma­jor move to­wards this as­pi­ra­tion.

Tech­nol­ogy­en­abled con­sumer power

The In­ter­net has done a lot more than just open up the In­dian real es­tate mar­ket’s to­pog­ra­phy. It has also brought with it a greatly re­booted job mar­ket - not only in terms of IT/ITeS jobs but al­most all in­dus­tries as a whole. To­day, In­dia is lead­ing from the front in terms of In­fotech-en­abled busi­nesses, with e-com­merce and a thriv­ing start-up cul­ture driv­ing eco­nomic growth.

Hous­ing for All by 2022?

In 1928, the US pres­i­den­tial cam­paign by the Repub­li­can Party promised Amer­i­cans ‘a chicken in ev­ery pot and a car in ev­ery garage’ if its can­di­date Her­bert Hoover won. Prob­a­bly noth­ing else could have cap­tured the spirit and spe­cific needs and as­pi­ra­tions of those times than this prom­ise. It was made a time just be­fore the Great De­pres­sion be­gan to spread its dark wings over Amer­ica in 1929, and was al­ready send­ing out signs of its com­ing.

Asofnow, the in­cum­ben­tGovern­ment’s ‘Hous­ing for All by 2022’ vi­sion may seem overly am­bi­tious. Ac­cord­ing to a re­cent re­port by the Gov­ern­ment re­port, the short­age of ur­ban hous­ing in In­dia has re­duced from 24.7 mil­lion, es­ti­mated at the start of the 11th five-year plan 2007 to 18.78 mil­lion in the next five-year plan 2012-2017. A short­fall of close to 19 mil­lion homes is not in­con­sid­er­able.

Nev­er­the­less, as an elec­toral prom­ise, it re­mains uniquely evoca­tive and rel­e­vant for In­di­ans to­day. In­deed, a roof over ev­ery In­dian’s head would be the most com­pelling de­liv­er­able for any Gov­ern­ment to ac­tu­ally de­liver.

Can­this dream­beachieved? A lot would de­pend on:

• Making land for af­ford­able hous­ing avail­able where it is needed the most

• Making the cre­ation of mass hous­ing a more at­trac­tive busi­ness propo­si­tion to de­vel­op­ers

• Cre­at­ing sin­gle-win­dow clear­ances for mass hous­ing projects to en­sure min­i­mum de­lay for such projects • Ramp­ing up in­fra­struc­ture de­ploy­ment in newly emerg­ing ar­eas where af­ford­able hous­ing can be cre­ated • Of­fer­ing fur­ther in­cen­tives for bud­get- strung first- time home­buy­ers Def­i­nitely, the Gov­ern­ment has within its grasp the means to make it hap­pen. Per­haps In­de­pen­dent In­dia will in­deed see this am­bi­tious goal achieved by 2022. For now, how­ever, we can still look back with jus­ti­fi­able pride and sat­is­fac­tion over the mile­stones al­ready crossed.

Over 71 years of vari­able eco­nomic growth led by dif­fer­ent in­dus­tries and sub­jected to rapidly chang­ing mar­ket en­vi­ron­ments, In­dia to­day stands heads and shoul­ders above other emerg­ing coun­tries.

MINT/FILE

Like the real es­tate mar­ket it­self, the mar­ket for hous­ing loans has be­come very com­pet­i­tive, giv­ing con­sumers the edge of choice.

MINT/FILE

The ar­rival of the Real Es­tate Reg­u­la­tory Act (RERA) in March 2016 brought in a par­a­digm shift in the sec­tor and meta­mor­phosed it into a more ma­ture, sys­tem­atic and reg­u­lated one

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