Real Estate Regulatory Bill: Pros and cons
Experts are of the opinion that though the Bill has many benefits for the actual users, it also has its share of limitations
Jun 18, 2013
Source : The Times of India

 

MUMBAI: The Union Cabinet recently approved the creation of a real estate regulator in India, which aims at increasing transparency within the real estate sector. The Real Estate Regulation and Development Bill 2013, once enacted, would provide for a real estate regulator in each state of the country. Experts are of the opinion that though the Bill has many benefits for the actual users, it also has its share of limitations.

The Bill would make it obligatory for the developer to disclose minute details related to the project on the company website. Details of the project like the layout, the number of plans the developer is planning to sell and even the amenities will have to be uploaded on the website. The Bill also seeks to prevent developers from making misleading claims that do not match the actual development on the construction site.

According to the Bill, developers will also have to maintain a separate bank account for a particular project in a scheduled bank. Seventy percent of the amounts realised for the project from the buyers have to be deposited within fifteen days of its realisation. This money will be utilised solely for meeting the costs of the particular projects.

Niranjan Hiranandani, managing director, Hiranandani Group of Companies, thinks that this move would suck up liquidity from the market. “Developers would have to look at other sources for funds, which could push the prices further up. The properties prices could hence, go up a bit due to these regulations,” he says.

Pratik Patel, director, Rajesh LifeSpaces, agrees. “The Bill will have a negative impact on the industry, especially the clause of keeping 70 per cent investment cost in the escrow account. As the money does not come cheap and permissions take one to two years to come, the growth in the industry will be affected. If I am building five projects per year, now I will be able to do just two to three at the most. The smaller builders will bear the brunt of this. The supply-demand gap will be adversely impacted,” he says.

Conversely, Nitesh Kumar, COO, TDI Infracorp Ltd, opines that “Regulation is a good idea as it will bring in transparency. However, the idea of 70 per cent of the collection to be kept in escrow account will push several developers into manipulating the cash flow to other projects as circulation of money is essential for large scale developers. In any case, there is an escalation of five to seven per cent every year. Increase in petrol and diesel adds further to the burden. All this leaves no option but to balance it out in overall price rise.”

The Bill also states that if any developer fully fails to comply with or breaches the provisions, he will be liable for punishment through imprisonment for a maximum period of three years, or a penalty of up to 10 per cent of the estimated cost of the real estate project, or both. Patel opines, “Compliance to every aspect will delay the project further. The interest on the funds will eventually be passed on to the endusers, thereby, taking the rates upward by 20-25 per cent. Plus, if we can’t presell our projects, the delay in projects will also aggravate supply-demand imbalance which already exists, pushing the prices further.”

All real estate brokers will also have to get a license to conduct their business. Yashwant Dalal, president, Estate Agents Association of India, explains that this is a positive move. “There could be some license fee or registration fee for conducting business. This will encourage only genuine brokers to be in the trade, who conduct a thorough study of the project they market,” he says.

Latest Realty News

Infra projects a driver for realty on Mira-Bhayandar stretch
Jun 18, 2013
MUMBAI: Affording a home in Mumbai and managing to travel across the city with ease is a big challenge for Mumbaikers today. While Mira Bhayandar Road provides some respite to homebuyers with a limited budget, the region’s extensive connectivity is also a big plus.
Home buyers increasingly turn to Virar
Jun 17, 2013
MUMBAI: When Bollywood actor Govinda made his debut in the Hindi film industry, people made fun of him, labelling him ‘Virar ka chokra’, as the actor hailed from the far-flung Mumbai outskirts. Just like Govinda, Virar has come a long way since then and real estate and infrastructure development have made the area a prime location for those looking for affordable and spacious homes.
Wakad realty thrives on road connectivity
Jun 17, 2013
PUNE: Wakad, located in West Pune, was once known as an extension to Pune with no infrastructure and connectivity. Today, the locality is witnessing massive real estate development. Connectivity, infrastructure and transport facilities are the prominent features that have turned into its favour.
A walk in the clouds
Jun 17, 2013
Mumbai: After checking out a dozen plush new residential properties, Nikita Chhatbar finally zeroed in on one. Interestingly, it was not the swimming pool, club house or gym that tipped the scales but a chance to go on her daily morning walk 300 feet above the ground.
Brokers turn developers as realty business booms
Jun 14, 2013
BANGALORE/ MUMBAI: PrashanthSambargi, partner at Bangalore-based real estate brokerage firm Mars Realty, is these days busy designing residential projects for two land parcels he owns in the IT capital of India. "I am now looking at smaller size projects with 18-40 units with 20 months' turnaround time... big builders do not enter this segment," he says.
Levying TDS complicates the home buying process
Jun 14, 2013
MUMBAI: The Finance Bill 2013 has introduced a new Section 194 IA which provides that with effect from June 1, 2013, the buyer of property will have to deduct tax at source at one per cent from the payment to be made to the seller, if the sale consideration is Rs 50 lakhs or more.
Five crore sq ft of office space lying vacant: JLL report
Jun 13, 2013
PUNE: Around 5 crore (50 million) sq ft of office space across the country is currently lying vacant, while the current demand is around 3 crore sq ft, annually according to the findings of real estate consultancy company Jones Lang LaSalle (JLL).
Airoli – a sought-after destination for homes in Navi Mumbai
Jun 13, 2013
MUMBAI: Considered as a pivotal node of Navi Mumbai, Airoli, the ‘gateway’ to Navi Mumbai has seen tremendous development in terms of residential and commercial in recent times.
Ghodbunder road in Mumbai has good options for realty investment
Jun 11, 2013
MUMBAI: Ghodbunder Road, one of the major roads running through the Thane district, is witnessing a rapid pace of real estate development. This road is several kms long and connects the eastern and the western express highways.
Relief to builders, Centre relaxes green norms for high-rises
Jun 11, 2013
MUMBAI: In what will be a big relief to builders in tightly-packed cities such as Mumbai, the environment ministry has done away with green clearances for high-rise buildings based on the width of the roads that they fall by the side of and the distance from fire-stations. It has left it to the state government to makes rules as they deem fit.

Latest Realty News Of State

Realty Talk's