Real Estate Bill Clears Govt Of Blame, Worries Some Builders
Aug 11, 2015
Source : TOI


Panaji: The Real Estate (Regulation and Development) Bill, 2013, which is still pending in Parliament, has the Goan real estate industry worried. While stakeholders agree that the bill, once passed, will bring clarity and confidence into the real estate market, developers are wary about the lack of onus placed on the government, which they feel, is an important stakeholder in the real estate economy.

In a bid to eradicate fraudulent practices and safeguard home owners, the central government's draft bill proposes to create a regulatory body and a redressal mechanism. To protect buyers' interests, the regulator will be empowered to impose stiff penalties on builders if they fail to transfer possession of an apartment or building as per the declared time.

The bill states that the end-user is entitled to claim possession as per the declaration given by the builder and if the builder fails to complete or is unable to give possession, he is liable to return the amount paid by the consumer and is also liable to compensate the consumer. In all this, the government finds no mention.

"The government has the right intention but in order to regulate the industry you have to bring all three stakeholders on board and the government is an equal stakeholder here," a Panaji-based real estate developer said.

CREDAI India, in a letter addressed to the Rajya Sabha secretariat, states, "The bill does not take into account other stakeholders like 'competent authority' or functional agencies who are not answerable to the regulatory authority which results in delays in projects and it is only the promoter who is made solely responsible."

The draft bill clearly states that it is responsibility of the promoter to provide essential services such as water supply, electricity, light in passages and staircases, lifts and sanitary services by the date of possession and that withholding of such services would amount to non-compliance.

"It should be explicitly provided that the project promoters are not liable for delays for want of approvals from statutory bodies," President CREDAI India, Getamber Anand, says.

"It is the government that gives electricity and water connections. If they delay, why should the developer pay for it?" a city-based architect asks, adding, "Very often delays in utility connections are a way to extort a bribe."

Talk to most developers and they will agree that palms have to be greased right from the panchayat to the minister-level if clearances are to be given on time. Failure to do so could lead to the electricity department claiming that electricity metres are out of stock or that it would take time for water connections to be completed.

Instead, the industry has suggested that it should be the responsibility of the government to provide water, electricity, drainage, sewerage connections.

"Even after paying infrastructure tax, we have to build access roads and put streetlights," a South Goa-based developer says, adding that all this finds no mention in the proposed bill.

The first move by the Goa government to regulate the industry through a bill was in 1993 and the latest attempt was made in 2010, but neither of them saw the light of day. If one goes by the bills proposed, even in Goa, there is no onus imposed on the government machinery to deliver essential services as per stipulated time or for deemed approval to be given once the time lapses.

The Goa Real Estate (Promotion Control and Development) Bill spoke about imposing penalties as high as 10 lakh on developers which on an average could easily amount to 10-20% of the value of the apartment.

Not all builders are concerned. Developers, especially those who are well-established and who promote mega projects, claim that the bill, even in its present form, is essential to weed out fly-by-night builders who often cut corners. "The bill is a must and I don't think the clauses about utility connections should worry people. Once the rules are in place it will be better for the market," another Panaji-based developer says.

"In the industry, we are all for regulation and this will help weed out the small operators," a spokesperson for one of Goa's leading construction houses said. "Ultimately it is the consumer who has to be worried because this is just another bottleneck that will drive costs up and this will be passed on to the consumer."


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