Buying property is a dream come true for many, especially so, for a first-timer. But there are pitfalls aplenty along the way.
What is a pleasant, even if strenuous exercise, may turn out to be unpleasant and bitter. The project could get delayed forever, floor plan changed without prior intimation or in the worst case scenario, price shoots up, or one get less carpet area than originally promised. Even worse, one could end up being a victim of fraud with the coveted property already sold to another or being built on encroached land.
The good news is, all these nightmares could be passe, with the Cabinet approving the long-awaited Real Estate (Regulation and Development) Bill, 2015 last week.
The Bill, which envisages setting up of the Real Estate Regulatory Authority (RERA) in all states and Union territories, will soon become an Act. The onus will then be on states to implement it, which done effectively, could be a game-changer, bring transparency and boost buyers’ confidence.
The law would be applicable both on commercial and residential projects and all realty agents should be registered with the Authority. It also seeks mandatory disclosure of all registered projects, including details of the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect and structural engineer.
“The amendments made in the Bill are likely to lift overall sentiments. The amendments are in the right direction, but it should be implemented within the time frame,” said Shishir Baijal, CMD, Knight Frank India Pvt Ltd.
According to Hemal Mehta, Senior Director, Deloitte India, the Bill would certainly lead to higher disclosures related to projects. “The proposed law will ensure the interest of home-buyers will be duly protected from fly-by-night developers who operate in large numbers. Because of a few unscrupulous builders, the trust factor has eroded over a period of time and this Bill will help restore confidence among home buyers,” said Mohit Goel, CEO, Omaxe.
The Cabinet approved nearly 20 amendments to the Bill. Foremost among them is the introduction of a provision to deposit 70% of the buyers’ money received by builders in the escrow account. Builders will be punished in case of violations. It also creates a much-needed consumer right protection umbrella for buyers.
However, the industry feels, the government should fix accountability of all stakeholders, including government authorities and local urban bodies. Developers are also worried they will be penalised for delays in project completion, even if it is due to delayed government approvals.
“The government bodies also need to be held accountable for ensuring reforms in archiac laws and timely project approvals,” said Anshuman Magazine, CMD, CBRE South Asia. “We wish sanctioning authorities were included in the Bill without bringing them on board, delays would continue in implementation of projects,” said Navin Raheja, MD, Raheja Developers. R K Arora, Chairman, Supertech said the Bill should engage approving authorities so that projects don’t get delayed.
“The authorities responsible for granting licences, permits and approvals, should also be made accountable,” said Mrinal Kumar, Partner, Shardul Amarchand Mangaldas & Co.
“Without ensuring that the approval process is not delayed by civic agencies’ inaction or bringing in single-window clearance, the regulator may inadvertently add another layer to the longer processes already delaying projects,” said Anuj Puri, Chairman & Country Head, JLL India.