Real state of Real Estate Bill
The bill is aimed primarily at ensuring that real estate projects around the country have to follow certain guidelines from the government to ensure that the interest of the buyer is protected. It is being hailed as a welcome step to put an end to the legal anarchy prevalent in the country when it comes to the activities – chiefly administrational and financial nuances – of real estate agencies. However, this doesn’t mean that your real estate ventures are protected by the act with immediate effect, since a lot of work has to be done by state governments over the next six months in implementing the act into the working order of things before this development would reflect in the life of the common women and men. Moreover, real estate developers also have to acclimatize to a number of policies and regulations once the act has been implemented in each state.
Based on the final documentation submitted by the parliament earlier this month, the act will address the some key issues with India’s real estate industry.
The bill is created to form a regulatory body to guard consumers and also address disputes and improve the image of the real estate industry as a whole. With every step taken to transform an industry, there come its own pros and cons. The real estate bill became an act on 1 May 2016 and has now initiated the entire process of revolutionize the way real estate is developed, marketed and purchased in India. Talking about its key advantages, one needs to highlight its benefits provided to the end users. It will make the process of real estate investments and business proceedings much more streamlined and transparent, benefiting the buyer in the long term and avoiding several conceivable routes to malpractice. Moreover, A legal umbrella for the protection of consumer rights will be included in future real estate investments. The major advantage for the buyer in lieu of this bill is that the bill provides for mandatory registration of all projects with the Real Estate Regulatory Authority in each State. Moreover, the registrations of agents with the state authority have become requisite. Moving towards the organized culture of doing real estate, this will make the sector more lucrative. The end user today is a corporate professional or an entrepreneur who likes to be dealt professionally. The brokerage profession with the right direction accompanied by mandatory trainings is heading towards filling this industry with NEW AGE BROKERS. The bill also states to enforce the contract between the developer and the buyer and act as a fact track mechanism to settle disputes.
Keeping the best interest of buyers as the focus, Developers who refuse to follow the guideline stated by the act will be fined severely, and redressals as fast within 60 day periods would be enacted. It will ensure that only developers with viable business proposals and plans for future development would remain the market. Delays in project launches, lack of transparency, lack of legal aegis and information, delays in dispute resolution, fraudulent practices and so on will be dealt with. 50% of the money invested by developers would have to be kept in an account that can only be used for the purpose of construction – this would prevent incidences of theft and misappropriation of funds. A developer cannot change the project plan without the consent of 66.6% of the owners of plots/flats part of the project. Hurdles for developers have increased. There will be no pre launches before mandatory approvals and the builders will be liable for structural defects for 5 years as against 2 years. All these amendments will be a challenge for a developer were as a buyer will benefit as this will lead to smoothness in blocked process of buying a home.
While all this seems brilliant and there is no doubt that the implementation of the act would lead to an amelioration in the way the real estate industry functions, there are a number of things that could be improved about the act, or things that should have to be monitored so as to prevent future mishaps. As a buyer one needs to watch out a few points in the times to come ahead. The state and local authorities play too big a role in approving individual projects and then following up on them until they are completed. A major point that needs to be kept in mind is that these regulators should not become approval hurdles themselves that will just add another tedious step for developers to get their requisite approvals for the project. Also with parking on funds in separate account, the burden on developers will increase and the developer might transfer that to the buyer by increasing his property prices. The land cost is the highest one has to bear today, and currently, most developers are facing liquidity crises, which will be heightened due to the bill. Also, with cost of raw material and land going up added to which they have to sell on carpet area basis now will definitely lead to price rise. Ambiguities in terms such as “carpet area” might lead to problems with standardization in future legal issues. Though the Model Bye Laws being approves by governments has shown that the government is all hands in favor of streamlining the approvals but still the Lack of “single window” clearance of projects implies that the clearance of projects to be taken by builders have a tedious task ahead.
Overall, the act can be proclaimed to be a successful venture by the government of India and concerned authorities are awaiting its implementations in all corners of the nation. This is just the beginning. The Indian real estate sector is in the right direction. With the full backing of Government, it just needs the fraternity to take the responsibility to support the initiative and move along in positive direction.