Bhubaneshwar developers hope revised realty bill will drive growth
Developers cheered about the proposed dilution of mandatory funds to be kept in a special account for any housing project
May 05, 2015
Source : The Economic Times (ETRealty.com)

 

BHUBANESWAR: Congress vice-president Rahul Gandhi may have thrown his might against the Modi government's real estate bill, but developers in the city feel certain key changes proposed by the new dispensation were urgently needed for the survival of the real estate sector.
 
A major change that has cheered the developers is a proposed dilution of mandatory funds to be kept in a special account for any housing project. The NDA government suggests that developers have to keep 50 per cent of advance received by them from buyers in the special account meant for the particular project. According to the UPA's draft bill, the developers would have to set aside 70 per cent of funds in such accounts.
 
"Land cost has become very high even in tier II and tier III cities. So, if a developer deposits 70 per cent in the designated account, one will be left with no leeway to operate. It would mean virtual shutting down of shops by many players," said Pradipta Kumar Biswasroy, president of Real Estate Developers' Association of Odisha.
 
The Congress and other opposition parties have argued that the dilution by lowering of funds would affect completion of projects and go against buyers' interest. "A practical suggestion is in the interest of both developers and buyers. We hope the new bill will drive growth," Biswasroy said.
 
The UPA bill defined carpet area as the net useable area minus the walls, which the NDA government's bill has omitted. The new bill also gives developers the freedom to carry out minor changes from the sanctioned plan without defining the type of changes. "These changes will not affect the customers' interest in any way. It will only give some elbowroom for developers to carry out their work," said D S Tripathy, governing council member of the Confederation of Real Estate Developers Association of India.
 
Tripathy said the UPA bill was too rigid about completion deadline of projects. "Apart from developers' fault, a project may get delayed due to pulling out of financers (banks), delay in providing various clearances by the government authorities and unavoidable developments such as natural calamities. The new bill should take these into account," he said.
 
Umesh Patnaik, president of Association for Odisha Real-estate Developers (AFORD), said action should be taken against a developer when he willfully defaults on his promise to customers. "The earlier bill presumed developers guilty for any delay or deviation," he said.

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