Getamber Anand, President CREDAI
MUMBAI: Hailing amendments made in the real estate regulatory bill, industry body CREDAI today said the proposed law would facilitate the growth of realty sector but demanded a relook at the clause that provides for including ongoing projects.
Yesterday, the Cabinet approved amendments to the long-pending Real Estate (Regulation and Development) Bill, 2013, bringing under its ambit commercial and all ongoing projects as also brokers, while safeguarding consumers.
"We welcome the bill. We always wanted a balanced bill which would facilitate real estate and not the bill which would breed more delays and corruption," CREDAI President Getamber Anand said.
Appreciating the government's effort in making bill practical, he, however, said there are certains provisions in the bill which needs to be relooked at, like bringing ongoing projects under the ambit of the proposed law.
"This will create a lot of confusion. Will work stop in such projects till registration of such ongoing projects is given?," he asked.
Anand said that this would lead to more delays even for projects nearing completion. "Bill should be prospective not retrospective as it will stall ongoing projects and all including consumer will suffer."
He also demanded that the wilful demand should be defined. "The proposal to create state and Central-level real estate regulators to safeguard the interests of buyers and investors is a positive step towards bringing discipline in the sector," Supertech Chairman R K Arora said.
While Bill already provides for strict penalties, including jail for errant builders, the amendments seek to make it mandatory for all developers, including of housing projects, to keep minimum 50 per cent of funds collected from buyers in a escrow account to meet construction cost.
Earlier, the provision was for 70 per cent. JLL India Chairman and Country Head Anuj Puri said: "This provision will effectively allow developers to continue their practice of diverting funds collected for a project towards land acquisition or other projects, and will work in their favour by also allowing them to grow their land and/or project portfolio.
However, he noted that the 50 per cent mandate will still place enough restriction on developers to divert funds elsewhere and ensure better completion records.
"The end result is that the Bill will be slightly less protectionist towards buyers. Other revisions include bringing in commercial projects under the purview of the bill, which will provide protection to investors of commercial assets, as well," Puri said.
In the new bill, ongoing projects that have not received completion certificates have also been brought under the purview of the Bill and such projects will need to be registered with a proposed regulator within three months.
National Real Estate Development Council (Naredco) Chairman Navin Raheja said local bodies, an important stake holder in the development process, have been left out in the Bill, which will now go to Parliament for approval before becoming a law. The Cabinet has extended its applicability to commercial real estate also.
"The inclusion of the commercial segment will expand the scope of the regulator thereby benefiting the industry as a whole. 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 only help rationalise property prices in the months to come," Knight Frank India CMD Shishir Baijal said.