What is the Reality of Realty Regulator

Ajay Sinha was on cloud nine as in a couple of months, he was to get possession of his apartment in Agra which he had bought from a reputed Delhi builder. But much to his chagrin, a month before the possession date, he got a demand notice of few lakhs though he had settled all the dues. When he took up the matter with the builder, he was told that, due to a wrong computer entry, the price of the flat in the ‘Buyers Agreement’ was mentioned as lower than the actual price. But when Ajay argued that it was not his fault and he had made all the payment as per the agreed price, he was curtly told that the only concession the company could offer to him was to equally share the loss.

This is just one example which depicts the plight of hapless home buyers shortchanged by the developers. 

Support for the Bill

The real estate industry, by and large agrees on the need for the bill. PSN Rao, chairman, NAR(India) and Professor of Housing, School of Planning & Architecture (SPA) describes the bill as a progressive step for organizing real estate industry. “It’s a universally accepted fact that wherever there are competitive markets with private service providers, a regulator has to be there. And there’s a strong case for a real estate regulator as there are a number of issues from the consumer point of view.” 

Lalit Kumar Jain, chairman, Credai & CMD, Kumar Builders justifies the regulator in view of increase in consumer complaints. Piyush Bhagat, MD, Space Group justifies government regulation saying that private regulation can’t be enforced. Brig (Retd) R R Singh, director general, Naredco sees the necessity of the bill because not only consumers have problems, even developers are facing issues like multiplicity of authorities and delayed approvals. Brotin Banerjee, MD & CEO, Tata Housing adds that the bill will ensure ethical practices, adherence to quality control measures, timely completion of projects, clear titles and transparent documentation, strengthening the trust and confidence of investors which in turn will result in market buoyancy. Pawan Aggarwal, MD, NK Realtors also believes that bill with provisions like construction-linked payments and escrow account will enhance the image of the sector, benefiting good developers and consumers. Anil Kumar Sharma, CMD, Amrapali Group and president, Credai (NCR) adds that the bill will help forge a bond of trust between developers and consumers and instill confidence among investors. 

Mohit Goel, CEO, Omaxe is of the opinion that the bill will discipline builders, especially non-listed ones, who lack accountability. J K Jain, chairman, Dasnac says that in the backdrop of only a few focused and dedicated players following good practices, the regulation will help curb manipulations and speculation by fly by night operators. Getamber Anand, CMD, ATS Infrastructure and president-elect, Credai (National) adds that now consumers can confidently and safely book a house in any registered project and chances of default will be very low.

Anuj Puri, chairman, Jones Lang LaSalle India, sums it up briefly — by bringing in accountability, the bill seeks to ensure that real estate transactions are carried out in a just and equitable manner. 

Industry reservations

Notwithstanding the hype, the industry has some reservations about the bill. Lalit Kumar Jain fears that the discretionary powers for registering/deregistering projects and provision for criminal prosecution of developers could lead to corruption and harm the interests of developers. 

Gemamber Anand endorses Jain’s view point adding that the broad based willful default punishable by arrest can be grossly misused by authorities. He suggests that in order to make redressal mechanism leaner and effective, regulatory authority should be the only court of redressal. 

Brotin Banerjee stresses on the need to check overregulation in the form of multiplicity of authorities that lead to inordinate delays. Jetu Virmani, CMD, Embassy Group describes the bill developer-specific and of not much use. He says that in any case with performance and after-sales customer service becoming key factors, good players are already following best practices. Boman Irani, CMD, Rustomjee Group and VP, MCHI-Credai cautions that unless all proponents of real estate industry-developers, financiers, government agencies and customers are covered, the bill will not have desired results. 

Pradip Chopra, chairman, PS Group strongly believes that the regulation will be of no use as its implementation, especially timely sanctions at state level may not happen. He says that a similar regulation in place in West Bengal for the last twelve years has done precious little except creating bureaucratic hurdles and encouraging corruption. Harsh Modi, director, Ideal Group endorsing Chopra’s views, says that lot ot these laws are already there in West Bengal but are not being enforced. He says that the bill will constraint supply and push up prices. 

Besides these reservations, the bill on the flip side, has certain drawbacks. The biggest drawback is that government departments do not come under its ambit and as such there is no provision to fast-track approvals by them. This is restricted only to residential projects above 4000 sqmts and not applicable to commercial property. Also, under-construction projects do not come under the purview of the bill. There is no provision for a standard sale agreement to check one-sided agreements, skewed in favour of developers.