The Road Ahead: Real Estate Bill
The Indian real estate market has seen a sea change in terms of development in the recent years and thus, industry experts are keeping high hopes that the market will gain its reputation after the implementation of RERA in each state. It has been accumulated that the real estate sector will generate revenues worth US$ 180 billion by 2020 against US$ 66.8 billion in 2010-11. The Real Estate (Regulation and Development) Bill, 2016, became an act on 1 May 2016, initiating the entire process of establishing the guidelines to protect the interest of home buyers in India. As one of the industry expert recently said that RERA is formed to revolutionize the way real estate is built, sold and consumed in India. 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 their 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.
The main aim of this bill was to set up a regulatory body to guard consumers and promote the sector. According to the bill, the regulatory body will address disputes and improve the image of the industry, which was degrading in the past few years due to various reports on forgery by unknown developers. A Real Estate investor (may be a seller/buyer) has always been facing problems with the delays in the project launches, insufficient information, lack of transparency, fast track dispute resolution, fraud practices etc; but the features in the Real Estate (Regulation and Development) Bill has given utmost importance to resolving the problems faced by the Real Estate end – users and thus it will be helpful in making Real Estate transaction a smooth process in all aspects.
The major advantages for the buyer in lieu with the new bill are that the bill provides for mandatory registration of all projects with the Real Estate Regulatory Authority in each State. Real estate agents who intend to sell any plot, apartment or building should also register themselves with this authority. It makes mandatory the disclosure of all information for registered projects like details of promoters, layout plan, land status, schedule of execution and status of various approvals. It seeks to enforce the contract between the developer and buyer and act as a fast track mechanism to settle disputes. The bill prohibits a developer from changing the plan in a project unless two-thirds of the buyers have agreed for such a change. This is a win-win situation for a buyer as this will in turn make sure that the projects are delivered on time by the builders.
In concise, the bill of 2016 is a big leap ahead which keeps the buyer's point in view and keeps a healthy check on the builder/seller. The bill casts an onerous responsibility on builders, in the form of project registration and mandatory disclosures on a regular basis through a portal to be maintained by the Real Estate Regulatory Authority (RERA).The bill strongly works towards the correction within the sector that were caused due to absence of regulatory body. Moreover, with the passing of the model Building Byelaws, government again has shown that they are in full swing to streamline the approvals.
The bill stipulates that the brokers need to register themselves with the State regulatory authority. This comes as a very big step by the government that will eventually lead to a transparency and professionalism in the real estate brokerage sector. Moving into an organized mode will make the real estate sector more lucrative. Progression in this sector totally depends on the broker’s skills and catering according to the needs of the customer. The brokerage profession with sufficient training is heading towards more organized zone. Training will play a crucial role for the industry to have NEW AGE BROKERS and eradicate Fly by Night brokers.
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. With all due respect to the act being a positive step towards the development of this industry, government authorities should be made accountable for timely approvals. Its implementation rules have to be made by the state governments within 6 months- by 31 October, 2016 as per the section 84 of the act. Developers are obligatory for a lot of policies and rules post the enactment of Real Estate Bill. Hurdles for Developers have increased to provide ease to buyers. From no pre-launches before approval to Builders to be liable for structural defects for five years as against two years, there are many such amendments that will become challenge for developers to work ahead whereas all these amendments in the act will bring smoothness in blocked process of buying a home for a buyer
These are the major changes and focus points of the Real Estate bill 2016 but still there are so many challenges which are to be tapped and covered by the future amendments namely; The bill is restricted to only purchase and sale of real estate projects and it misses out on the problems faced by builders when it comes to approval bottlenecks. The requirement to park 70 percent of collection in a separate escrow account is likely to be a big dampener for the already cash strapped builder. I believe that it’s a good move but the only hunch being that the burden should not fall on the end customers due to unnecessary price rise. These are some of the shortcomings of the bill that can be worked on in future, with time as the bill would be implemented on a practical ground we would see the finer details and would understand what more needs to be worked which would ultimately lay grounds for the newer amendment. Lack of “single window” clearance of projects implies that the clearance of projects by the government would take long. More burden on developers might imply an increase in the price of real estate, thereby passing on the trouble to the buyers of property.
With all these benefits and lags in the bill, the year is still going to be vital in making a strong foundation for this sector to move ahead in the right direction and eventually emerge as a developed mature market based on trust, accountability and customer service. 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.