Real estate Regulatory bill and the path forward

The real estate market in India has witnessed a hulking transformation in regards to development in the recent times. Many policies and schemes have been introduced by the Indian government to improve the condition of the real estate sector. The latest development is undoubtedly the implementation of RERA in each state. This has led the market experts to maintain optimism that the real estate market's reputation will enhance.

One of the industry experts, Mr.Surendra Hiranandani believes that the year 2016 will see the buyer influencing the industry dynamics. He says “The real estate sector has witnessed a mixed bag of trends in FY 2015. Tough lending norms from banks and financial institutions, project delays, and cost escalations have proven a dampener. However, Easing of FDI norms, housing for all, steps towards setting up of a regulatory body, focus on smart cities development, softening of interest rates, considerable progress towards implementing REIT have certainly helped in building positive sentiments in the real estate industry”. He further added, "Given the recent policy changes, FY 2016 would primarily be a buyer-driven market, with buyer strongly influencing the industry dynamics. Builders with strong track record in terms of not only delivery but also maintaining excellence in quality and design will have an edge with the discerning buyer.

To build on the positive developments in real estate industry, what would be critical is industry friendly policies such as single window clearance, easy project finance options for developers and passing of RBI rate cut benefits by banks to home buyers."  

Another industry guru claims that RERA will be instrumental in revolutionizing the way the properties are built, sold, and bought. The prime objective of this bill is to establish a regulatory body, which safeguards the interests of consumers. This regulatory body will be responsible for addressing the disputes of the buyer to maintain the reputation of the industry.

The primary benefit that the bill offers to the buyer is that it mandates the registration process for any real estate project with RERA. It is essential for all the agents, who are willing to sell any property, to register themselves with this authority. It also requires the revelation of all the details related to the registered deals like the land status, layout plan, details of varied approvals, and promoters. The bill aims to reinforce the pact between the builders and buyers and act as an accelerated court to resolve altercations. The bill also restricts the developer from changing the plan without the consent of at least two-third of the buyers.

The bill is introduced to keep a watch on the builders and sellers. It gives an arduous responsibility to the builder of registering and disclosing information on a regular basis through a portal, which is maintained by RERA.

The bill also mandates the registration of brokers with the State regulatory authority, which was a much-needed step taken by the government. This will give the real estate brokerage sector more transparency. Also, working in an organized manner will make this sector all the more profitable.

Growth in the real estate sector has a lot to do with the broker’s skills and his/her ability to cater to the needs of the customer. Training will play an important role in the industry to acquire accomplished brokers as opposed to amateurs.

These are some of the challenges of the real estate bill 2016. Apart from these, there are other shortcomings of the bill that need to be covered by the future amendments. For instance, the bill is restricted to only buying and selling of properties and does not consider the problems the builders face when it comes to approval bottlenecks. Also, the need to keep 70% of the collection in an escrow account is likely to create problems for the builders with limited resources. Though this is a good move, there are chances of an unwanted price hike that would ultimately affect the end buyer.

This is a guest post by Deepak Yewle