Real Estate Amendment Bill Has Developers Wishing for More
The need for the consent of 2/3 rd allottees for changes in structural designs will now ensure adherence to declared plans as well, explained Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield
Apr 11, 2015
Source : The New Indian Express
Sanjay Dutt, Executive Managing Director, CW

 

HYDERABAD: Real estate developers have welcomed the Union Cabinet’s approval of the Real Estate Regulatory and Development Bill as they believe this will bring forth high levels of transparency, accountability and standardization for the industry, which for long has been either self- regulated or working on best practices principles.

“One of the key changes is the inclusion of ongoing projects (which have not received completion certificates) within the ambit of this bill, thus enabling increased relevance and impact of the bill provisions for the existing investor/ end-user base. The need for the consent of 2/3 rd allottees for changes in structural designs will now ensure adherence to declared plans as well,” explained Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.

Pointing out that the bill will be beneficial to the consumer, developers said it would also help bring in more investments and commercial projects.  “Apart from protecting home buyers and bringing in credibility to the developer community, we also see this working positively in terms of attracting investments from domestic and international funds.

Commercial projects have also been included within the ambit of the bill and regularization will act as a major confidence-building mechanism, especially from the occupier’s perspective and strengthening investor confidence,” Dutt asserted.

With the government lowering the cash deposit from the earlier 70 per cent to 50 per cent, developers feel that it will increase working capital availability and also be an enabler for dealing with prevalence of high land cost on a case-to-case basis.

The Real Estate Regulation & Development Bill was introduced in 2013 and was amended recently to include key measures to bring better transparency, accountability and standardization for the industry.

“The move taken by the government will boost the morale of the sector and bring in the right kind of momentum through provisions such as setting up of project specific escrow accounts, establishment of a regulatory authority, mandatory registration of projects, developers and brokers, and public disclosure of project details, etc,” Dutt added.

Echoing his views, Shishir Baijal, chairman and managing director, Knight Frank India, said, “It’s an extremely positive move and consumers will benefit the most from it. Over the last few years, the whole industry had been passing through a credibility crisis with fresh deals almost drying up.

The bill will help drive in greater accountability, and bring back customers who have so far been sitting on the fence. The inclusion of the commercial segment will expand the scope of the regulator thereby benefiting the industry as a whole.”

Developers, while admitting the unquestionable positives from the amendment bill, felt it could have been slightly better had all the authorities been brought under its purview.

“The expected transparency is likely to enhance the credibility of the sector as developers will be in a position to borrow funds at competitive rates.

This will help rationalize property prices in the months to come. On the flip side, the bill could have been more effective had all the approving authorities been brought under its purview.

Overall, the bill is expected to infuse a fresh lease of life into the sector,” Baijal added.

What the Bill Means for Buyers

¦ Provides for mandatory registration of all projects with the Real Estate Regulatory Authority in each State. Real estate agents should also register themselves with this authority

¦ Disclosure of all registered projects, such as details of promoters, layout plan, land status, schedule of execution and status of various approvals made mandatory

¦ It seeks to enforce the contract between the developer and buyer and act as a fast-track mechanism to settle disputes

¦ 50 per cent of buyers’ investment has to be deposited into an escrow account that would be used only for the construction of the project

¦ Developer prohibited from changing the plan in a project unless two-thirds of the allottees agree

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