NEW REAL ESTATE BILL – WILL IT REALLY HELP?
By Ruma Dubey
The Winter session of the Parliament begins next week, on 22nd Nov. And amidst a whole host of ‘expectations’ prime amongst them being the hope that the Govt will be able to knock off the acute sense of inertia, the session will also witness the tabling of the swanky new Real Estate (Regulation and Development) Bill, 2011. An extremely 'purchaser friendly' draft, if it does get approved and becomes a Bill, it is said that it could make the realty sector more transparent, keeping intact interest of the consumers. Naturally, if the Bill is good for the consumer, the builders obviously are crying foul and are not too happy a lot. That’s ok. For them, it could mean a fall in margins from around 60 to 70% to maybe 50%? They can surely live with that. Or else, they will do what they do best – pass on every cost to the consumer. Afterall, today the consumer is paying up the ‘service tax’ and other costs levied by the Govt. There is one particular builder who is asking the customers to pay for even the MMRDA development costs! So any new rule, which makes life easier for the customer and sticky for the builders, is welcome! But the moot question is – will this new Bill really help?
A quick look at the new Real Estate (Regulation and Development) Bill, 2011:
Setting up of the Real Estate Regulatory Authority in each state to co-ordinate efforts regarding development of the real estate sector and offer necessary advice to the state governments and centre
Builders will have to register themselves before launching housing projects
Builders to strictly adhere to the approved plans
Money to be refunded to homebuyers in case they default
If developer willfully fails to comply with the norms they shall be punishable with imprisonment for a term of up to three years or a penalty which may extend to a tenth of the estimated cost of the real estate project, or both.
Builders to set up a separate escrow account to compulsorily deposit 70% of the funds received from buyers and to ensure that these funds are used for that real estate project only.
Provide all information to the buyers who have booked apartments, which includes site plans along with structural designs and specifications.
Apart from area of the land being developed less than 4,000 sq mt, builders will have to necessarily register with the Real Estate Regulatory Authority for accreditation.
All this sounds good. Our plans are always very good but it is implementation which kicks the bucket. And if we have brains coming out with these super ideas, there are super brains which think of ways to find loopholes in any new law or policy. Undoubtedly, it would be no exaggeration to say that realty is one of the most corrupt sectors in India, a haven for black money. And the so-called law makers and politicians are the ones who have much at stake in Indian realty. So coming up with changes which will affect their pockets, especially the purse holding the black money is extremely doubtful. Every man on the street right from the taxman, to the ex-chequer and ministers are aware of how realty deals are made. What is shown as actual area is much lower than what the consumer gets charged for. The “60-40” or “70-30” is still very much rampant.
So will this Bill really bring about any major changes in the Indian realty sector. The answer is unfortunately a big, fat, “no”. Intentions are good and even if it comes in, builders will come up with ways to worm their way out. We all pay incredulous maintenance charges, deposits for maintenance, car park charges and all this despite laws in place to protect the consumer. But till every realty deal in India gets ‘online’ where every transaction is linked online, right from the transactions with the builder, banks and payments made to state Govt’s and tax authorities, any new law or policy is place, is just that – just a policy which experience tells us, will be blatantly flouted.
By Ruma Dubey
The Winter session of the Parliament begins next week, on 22nd Nov. And amidst a whole host of ‘expectations’ prime amongst them being the hope that the Govt will be able to knock off the acute sense of inertia, the session will also witness the tabling of the swanky new Real Estate (Regulation and Development) Bill, 2011. An extremely 'purchaser friendly' draft, if it does get approved and becomes a Bill, it is said that it could make the realty sector more transparent, keeping intact interest of the consumers. Naturally, if the Bill is good for the consumer, the builders obviously are crying foul and are not too happy a lot. That’s ok. For them, it could mean a fall in margins from around 60 to 70% to maybe 50%? They can surely live with that. Or else, they will do what they do best – pass on every cost to the consumer. Afterall, today the consumer is paying up the ‘service tax’ and other costs levied by the Govt. There is one particular builder who is asking the customers to pay for even the MMRDA development costs! So any new rule, which makes life easier for the customer and sticky for the builders, is welcome! But the moot question is – will this new Bill really help?
A quick look at the new Real Estate (Regulation and Development) Bill, 2011:
Setting up of the Real Estate Regulatory Authority in each state to co-ordinate efforts regarding development of the real estate sector and offer necessary advice to the state governments and centre
Builders will have to register themselves before launching housing projects
Builders to strictly adhere to the approved plans
Money to be refunded to homebuyers in case they default
If developer willfully fails to comply with the norms they shall be punishable with imprisonment for a term of up to three years or a penalty which may extend to a tenth of the estimated cost of the real estate project, or both.
Builders to set up a separate escrow account to compulsorily deposit 70% of the funds received from buyers and to ensure that these funds are used for that real estate project only.
Provide all information to the buyers who have booked apartments, which includes site plans along with structural designs and specifications.
Apart from area of the land being developed less than 4,000 sq mt, builders will have to necessarily register with the Real Estate Regulatory Authority for accreditation.
All this sounds good. Our plans are always very good but it is implementation which kicks the bucket. And if we have brains coming out with these super ideas, there are super brains which think of ways to find loopholes in any new law or policy. Undoubtedly, it would be no exaggeration to say that realty is one of the most corrupt sectors in India, a haven for black money. And the so-called law makers and politicians are the ones who have much at stake in Indian realty. So coming up with changes which will affect their pockets, especially the purse holding the black money is extremely doubtful. Every man on the street right from the taxman, to the ex-chequer and ministers are aware of how realty deals are made. What is shown as actual area is much lower than what the consumer gets charged for. The “60-40” or “70-30” is still very much rampant.
So will this Bill really bring about any major changes in the Indian realty sector. The answer is unfortunately a big, fat, “no”. Intentions are good and even if it comes in, builders will come up with ways to worm their way out. We all pay incredulous maintenance charges, deposits for maintenance, car park charges and all this despite laws in place to protect the consumer. But till every realty deal in India gets ‘online’ where every transaction is linked online, right from the transactions with the builder, banks and payments made to state Govt’s and tax authorities, any new law or policy is place, is just that – just a policy which experience tells us, will be blatantly flouted.
No comments:
Post a Comment