The Competition Commission of India (CCI) today said the Centre as well as state governments should come out with regulatory framework for the realty sector to protect consumers from unfair trade practices.
"The absence of any single sectoral regulator to regulate the real estate sector in totality, so as to ensure adoption of transparent and ethical business practices and protect the consumers, has only made the situation in the real estate sector worse," said CCI in an order against DLF.
The CCI has imposed a hefty penalty of Rs 630 crore on the realty major for abusing its dominant market position on a complaint by 'The Belaire' association in Gurgaon.
At the time of ordering investigation by the director general against DLF last year, CCI had also decided to probe the practice in the real estate sector on the whole.
Realtors issue advertisements for launching projects without the land in question being actually purchased or registered and without taking prior approval of competent authorities, CCI said.
They also do not specify the total area of the plot/flat/house indicating clearly the carpet area and utility area, nor the date of delivery and consequential remedies available to the consumer in case of delay, it added.
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"The commission, therefore, makes a strong recommendation to the central government and all state governments to come out with real estate regulations at the earliest for ensuring overall consumer welfare and to discourage unfair trade practices that seem prevalent in the sector," CCI said.
It also said the amount collected from the allottees against a particular project is not deposited in a designated escrow account and utilised only for the construction of the concerned building.
Besides, the information relating to the progress of works and status of account of each allottee is not made available to buyers in a transparent manner.
Also, realtors build in hidden costs, other than the initial set price and do not make relevant information public.
CCI said there is often inordinate delay in execution of the project and if the project is delayed without previously agreed valid reasons.
The CCI, which became fully functional in May 2009, draws its power from the Competition Act 2002 to check anti-competitive practices and abuse of dominant market positions.