More transparency and accountability in the system
Mar 19, 2014
Source : The Times of India


PUNE: Lack of transparency in thereal estate sector, has been talked about for long, and the creation of a housing regulatory body has been discussed, at the central and the state level. The Maharashtra government has taken the first step in this direction by paving the way for the implementation of the Maharashtra Housing Regulation and Development Act, 2012, which would establish the country’s first regulator for the housing sector. The state act aims to regulate and promote the construction, sale, management and transfer of flats, on ownership basis and establish a Housing Regulatory Authority and a Housing Appellate Tribunal. The government’s move comes close on the heels of the presidential assent, received recently.

Anuj Puri, chairman and country head, JLL India, says, “As of today, the real estate industry faces issues in terms of insufficient transparency over cost and time-frames, and also lacks sufficient depth, when it comes to credible developers. Hopefully, the state-level housing regulator will implement systems, which will mitigate risks and increase accountability. It can potentially boost transparency by standardizing practices, streamlining procedure systems and attending to consumer grievances, in a decisive and timely manner. It will, therefore, help in bringing about a greater level of trust between buyers, sellers, developers and financial institutions that fund the real estate sector.”

Rayomand Dastur, EVP, Shapoorji Pallonji Real Estate, says, “The biggest advantage of the Act is that it seeks to protect the interest of the buyer. Points like getting all sanctions and commencement certificates before selling or marketing apartments and the addition of time-limits for construction schedules, will definitely make the buyer more comfortable with his purchase.” Sharing his views Sachin Sandhir, managing director, RICS South Asia, adds, “The Maharashtra state government’s efforts to bring a real estate regulator, are laudable. Problems such as lack of transparency and irregularities within property transactions have made homebuyers wary of investing in the sector. Home buyers are worried about unscrupulous elements operating within the sector and the problems created by project delays, non-disclosure of project details and rampant advertising of projects without prior permission or approvals to start the construction.”

According to the Act, registering the housing project and displaying it on the website of the Housing Regulatory Authority, becomes mandatory for the developer. The promoter will have to pay fees not exceeding Rs 50,000, along with the application for registration. However, registration and display of the project would not be required, if the area of the land, proposed to be developed into a project, does not exceed 250 sq mts, and the total number of flats proposed to be developed into a project, inclusive of all phases, is less than five.

Rohit Poddar, managing director, Poddar Developers, explains how, “The developers will now have to register their project with the housing regulator.” The details about flats would have to be displayed on the website of the authority, before the start of any transaction, including marketing. The promoter shall be entitled to sell retained flats in each of the buildings, only after the receipt of the Occupation Certificate or building completion certificate from the local authorities for that building. The developer has to enter the record or details on the website of the authority. No order of cancellation of registration of the project would be issued by the housing regulatory authority, unless reasonable opportunity of being heard is given to the developer. Puri explains that “The biggest advantage that it offers to buyers as industry stakeholders, is that there will be an arbitrating body available to attend to their grievances and redressals.”

Furthermore, the promoter will be responsible for repairing the defects and faults in the building constructed for five years, once the flats are handed over to the owners. The housing appellate tribunal will hear the appeals and give a decision in three months, which can be challenged only in the High Court. The regulator will be bestowed with the powers of a civil court and can impose a fine of up to Rs 1 crore and a prison term of three years, on promoters who fail to honour their commitments. The new rules also prohibit property developers from selling or advertising housing schemes before receiving the requisite approvals from the regulator.

Sandhir points out how, “The new rule, not just aims to bring transparency into the real estate sector but also empowers home buyers. While it makes it mandatory for builders to make complete disclosure regarding their housing projects, its provisions clearly define the common areas in the project and the usage of the carpet area, which will make transactions fair and just. Buyers will now make an informed decision while buying property.” According to the provisions, the layout, including the recreation ground, park, garden and playground, disclosed along with the building plan, can be amended, modified and varied by the promoter from time to time, in accordance with the Development Control Regulations, including the utilization of the full development potential available from time to time.

Kishor Pate, CMD, Amit Enterprises Housing Ltd, says, “It provides buyers with means to have their grievances heard and acted upon. It also specifies that all projects must have the requisite Occupation Certificate or building completion certificate prior to it being marketed. However, there also needs to be an acknowledgment of the fact that the bureaucratic mechanism to get a project approved, needs to speed up. Slower project approvals will result in slower completions, which could negatively affect the housing market.”

According to Arvind Jain, managing director, Pride Group, “Buyers will benefit from the assurance of cleaner property purchases and decreased danger of investing in unauthorized projects. However, it can potentially increase the time required to deliver projects, since the approval process is already very slow and cumbersome.” Involvement of the government machinery should reduce the approval time for projects. The bigger worry is that a number of projects in the state and at the national level, are being delayed due to regulatory bottlenecks.

Dastur adds that “While this is a move in the right direction, issues such as roping in all the authorities together, to bring all clearances under a single window, is yet to be addressed.” Poddar adds that “This Act hasn’t taken a holistic view, in terms of addressing the requirements of all stakeholders including developers. There is no provision for a single window clearance for building approvals, which take a disproportionate amount of time with no certainty, causing delays, which ultimately the customer lands up paying for. The Act doesn’t have a redressal mechanism for malpractices by the customers.”

Latest Realty News

‘Real estate prices will rise 5-15% over six months after elections’
Mar 18, 2014
MUMBAI:Probably the only real estate developer in Mumbai offering office space from 1,500 sq ft to 80,000 sq ft (on a single floor plate), the Marathon Group has managed to ride the slowdown in commercial real estate by pioneering the concept of small office spaces for start-ups and large floor plates for multi-national companies in the city.
Property prices cool, but home rents heat up
Mar 18, 2014
MUMBAI: Property prices have cooled down significantly in the last one year. So, has this led to a lower rental bill for tenants? No, rents in most cities have increased in the last 12 months, with some localities even witnessing hikes of up to 20 per cent.
Builders flout rules, sell flats in projects sans clearances
Mar 18, 2014
MUMBAI: Without any construction permissions in place and sometimes even when land titles are not clear, builders in the city have been enticing clients to book flats early at discounted rates although it is illegal under the law.
Mumbai builders flout rules, sell flats in projects sans clearances
Mar 18, 2014
MUMBAI: Without any construction permissions in place and sometimes even when land titles are not clear, builders in the city have been enticing clients to book flats early at discounted rates although it is illegal under the law. In fact, by luring investors to book flats by paying just 10% to 20% before the first brick is laid, developers manage to sell 200 to 300 flats even before the project is publicly announced in some cases.
PE investments up by 13 per cent in realty sector for 2013
Mar 18, 2014
MUMBAI:Global real estate consultancy, Cushman & Wakefield’s latest report on private equity (PE) investments in real estate, revealed that total inflows from private equity funds in the real estate sector for 2013 was recorded at Rs 7,000 crores (USD 1.2 billion), an increase of 13 per cent as compared to 2012 (Rs 6,200 crores / USD 1.1 billion). Overall private equity investments across sectors in India have also increased by 11 per cent from USD 9.49 billion in 2012 to USD10.5 billion in 2013
Balewadi, Pune: Well-developed infrastructure and strategic location
Mar 18, 2014
PUNE: Balewadi is a rapidly emerging area on the western corridor of Pune with steady growth over three to four years. This locations has seen tremendous growth from a rural area to one of the most preferred residential areas. It has become a hot area for residential projects, mainly targeting the software professionals working in the nearby Hinjewadi Software Park and other nearby information technology parks/companies.The rates there have seen an annual increase of 20 per cent over the past tw
Real estate NCDs: Good returns but with high risks
Mar 17, 2014
MUMBAI: Since March 3, the BSE realty index has gained 14.2 per cent, compared with the Sensex's 3.95 per cent rise. Though real estate developers are reporting a slowdown in sales, in most centres, returns by real estate-linked non-convertible debentures (NCDs) are 18-22 per cent a year.
Real eatate agent shot dead by friend during Holi party
Mar 17, 2014
BADLAPUR: A 48-year-old real estate agent was shot dead by his friend at a Holi party in Badlapur area on Sunday night.
Need political will to extend Kolhapur city limits, real estate developers say
Mar 16, 2014
KOLHAPUR: The real estate developers are irked over the lack of political will to approve the proposal to extend the city limits for providing affordable housing and boosting real estate growth.
IRDA asks SBI Life to refund Rs 275 crore
Mar 13, 2014
MUMBAI: In a move that will benefit 7.5 lakh borrowers of State Bank of India Group, the insurance regulator has asked SBI Life to refund Rs 275 crore of premium collected from policyholders, which makes it the biggest refund order in insurance history. The life insurer, which was earlier fined for mis-selling its Dhanraksha Plus LPPT through SBI and associate banks, has now been asked to refund excess commission that it has paid out of premium collected under this policy.

Latest Realty News Of State

Realty Talk's