Will the real estate bill protect home buyers’ interests?

[ecis2016.org] While it is hoped that the Real Estate Bill will insulate home buyers from unfair pricing, sudden changes in construction plans and abrupt increase in property prices, buyers may have to wait a bit more for its implementation

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To benefit home buyers and developers

After a protracted delay, the government finally managed to pass the Real Estate (Regulation and Development) Bill in the Rajya Sabha, on March 10, 2016. It is hoped that the bill will bridge the wide trust deficit between home buyers and developers.

“The proposed regulation under the act, is expected to ensure timely delivery of projects. If successful, this will improve the confidence of funding agencies and buyers in builders,” says Neeraj Bansal, head – real estate and construction sector, KPMG India.

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According to experts, the passage of the bill, will help to check unfair pricing, sudden changes in construction plans and abrupt increase in property prices. On one hand, it will empower the buyer and on the other hand, it will make the builders accountable, they feel.

Anshuman Magazine, chairman and MD, CBRE South Asia Pvt. Ltd. states, “The Real Estate (Regulation and Development) Bill, will have far-reaching implications on the real estate and construction sectors. It will help regulate the sector and promote transparency. If implemented in the right spirit, it could facilitate greater volumes of domestic, as well as overseas investment flows into the sector.”

Grey areas remain

Nevertheless, some realty players remain sceptical on whether the realty bill will bring any immediate positive impact on the market, unless some curbs are placed on the unorganised sector. JC Sharma, VC and MD of Sobha Limited is also critical of the lack of accountability, vis-à-vis the authorities.

“The bill made no mention of time-bound approvals by various central, state and local agencies, which is crucial for the growth of the sector. The decision to keep up to 70% of the funds collected from consumers in an escrow account, may not be the best way to make use of the collected funds, especially when liquidity in the sector is not good and the availability of bank finance for consumers remains restricted,” explains Sharma.

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[ecis2016.org] The Real Estate Act comes into force from 1st May 2016

However, he agrees that the regulations will help to weed out fly-by-night developers and help customers in identifying good players in the market.

While welcoming the passage of the Real Estate Bill, the Confederation of Real Estate Developers’ Associations of India (CREDAI) expressed concern over including ongoing projects under the legislation. This would mean stopping the work and ensuring that the ongoing projects comply with the new legislation. If 50% of a project has already been sold and construction is underway, it is practically impossible to make 50% of the project compliant with the act. On the other hand, making the project fully compliant would be absurdly inconvenient and prohibitively expensive, the developers’ association pointed out.

Implementation holds the key

“This act is definitely a step in the right direction for property buyers, given the detailed disclosure requirements, stringent penalty provisions and restrictions on the deployment of funds and change in plans by promoters,” maintains Aakanksha Joshi, associate partner, Economic Laws Practice. “However, given that the regulatory authority will now need to be constituted, property buyers may still have to wait for the law to come into force. Further, the manner of implementation of this legislation is yet to be seen,” adds Joshi.

While anxiety prevails, all stakeholders in the real estate sector, are hopeful that the bill will be enforced quickly and its implementation will open a new era of opportunities and growth.

Source: https://ecis2016.org/.
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Source: https://ecis2016.org
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