How does the new Real Estate Regulatory Bill in India help me? What impact will this bill have on real estate sector in India? And what are its shortcomings...

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

In June 2013, Government of India brought in Real Estate Regulatory Bill to provide for a uniform regulatory environment, to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector and has been much awaited by all aspiring home buyers.

The Real Estate (Regulation and Development) Bill, 2013 is a pioneering initiative to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects.

The Bill focuses on 3 principle parties namely, the real estate developer, the buyer, and the regulator.

What does the Bill intend to provide in nutshell?

1. Introduction of the concept of using only ‘carpet area’ for sale which has till now been ambiguously sold as super area, super built up area etc.
2. Register real estate agents which have hitherto been un-regulated, with clear responsibilities.
3. Promoters (Builders) to register all projects, prior to sale; and only after having received all Approvals from development/municipal authorities and functions.
4. Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for the promoter buyer and the real estate agents.
5. Timely completion of projects, and prevent fund diversion.
6. Speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents.
7. Developers or builders have to put aside 70 per cent of the proceeds of a particular project in a separate bank account which will help to fund the project and in timely delivery.

Well, in its present form the bill appears to be a "Real Estate Thana" and every wrong doing by real estate developer can be reported in this "Thana" and necessary action will be taken as per the Bill's guidelines. However, we all know, how long and tedious it gets to get justice from "Police Thanas". So, let’s wait and watch what action or justice comes out from this new "Real Estate Thana".

Make no mistake, even though the bill falls short on policy front...yet it could prove to be helpful for buyers. However, the bill would have served the larger purpose if it were to encourage people including builders, buyers, and government agencies to do right things instead of taking action when something wrong has been committed. Lets explore...

What is needed?
We need environment ministry, income tax authorities, revenue department to work in tandem with Real Estate Regulatory Authority to provide clearances, keep a check on fair practices, and study the real estate market regularly.

1. The idea is to have a single window clearance mechanism wherein real estate developers submit their plans for approvals and the regulator approves or disapprove the same. It is estimated that, this alone can reduce the cost of housing by about 20%. Phew…
2. Income tax department to check who is buying the property from developers. In other words, it should be made mandatory by law for real estate developers to disclose the buyer details. This will ensure true demand for the housing and keep away speculators. After all housing is a need first and then investment vehicle.
3. Revenue department to study the real estate and housing market carefully and then levy stamp duty. It is widely believed that reducing stamp duty and registration charges will encourage buyer and seller to report the market value of property instead of the circle rate value. Thereby, eliminating cash from resale market.
4. Environment ministry to provide timely and consistent environment clearances with regards to water, natural resources, forestation, etc.
5. Land acquisition department to ensure that land has been acquired as per the governing law.

Well, we do not live in an ideal world and let's hope slowly but surely, the role of real estate regulator evolves and we have an act that promotes fair practices on part of all the concerned parties involved.

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