The Real Estate Regulatory Bill approved by the Cabinet is giving jitters to the realty sector. There is a consensus among developers across India on the need for a realty regulator. But, there are apprehensions about right implementation.
Talking to Business Standard, the chairman of the Confederation of Real Estate Developers' Associations of India (CREDAI), Lalit Kumar Jain, said a regulator for real estate was the need of the hour.
"We have regulators for telecom, banking and stock exchange. Likewise, a watchdog is a must for real estate. It should provide a level-playing field for all stakeholders. The provision for criminal prosecution could lead to the exit of professional and qualified developers."
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"Else it will be another establishment with huge costs, serving no purpose other than adding cost, thereby making tenements costlier."
Jain welcomed the statement of Ajay Maken, union minister for housing and urban poverty alleviation, that the Bill provided a uniform regulatory environment to protect consumer interests, help speedy adjudication of disputes and ensured orderly growth of the real estate sector.
"Also, the promotional role of the proposed regulator, like standardisation in the sector carpet area, checking money trail and curbing laundering, professionalism and promoting planned development are music to our ears," he said.
The provision for mandatory deposit of 70 per cent of the cost in an escrow account is impractical, said Jain.
The construction cost varies in different markets. In micro markets, as in prime areas, the cost might be around 30 per cent whereas in the suburban areas it could be 80 per cent of the entire cost of elements. The provision should be based on the ratio of the extent of the construction cost so as to ensure timely completion of projects, and prevent fund diversion. Otherwise, the growth in the sector will get arrested as funding for land purchase is just not available from banks.
He explained the Bill provided for a speedy and specialised adjudication mechanism to settle disputes by a joint secretary. This is not practical since the judicial process is a specialised task and an expert can only redress the disputes. Or, it should be left to a judicial officer and not bureaucrats, who may be influenced by higher-ups or be susceptible corruption.
Getamber Anand, CMD of ATS Group, said "We are not against a regulator in principle, but any such bill should not be anti development and retro grade in nature. With unilateral provisions it may be misused by people in the power to unnecessarily further delay real estate projects.
For example - registration with the regulator should be deemed done once applied for rather than give a 30 day lever to the sanctioning authority to delay the application on any flimsy ground as was provided in the earlier version of bill.
Also cancellation of registration can be highly misused an jeopardise projects which are well underway and thereby harm even the consumers."
Deepak Sachdev, CEO and ED of Country Colonisers Pvt Limited, a unit of Wave Estate told that the bill was desireable. "There may be short-term jerks for the developers in unorganised sector but will help in safeguarding the interests of consumers. A satisfied consumer means business for everybody. The only concern is that it should be implemented correctly. Any initiative that is business friendly would fetch the good results."