Real estate regulator a win-win for developer and buyer

Anjali Agarwal
moneycontrol.com

The approval of the Real Estate (Regulation and Development), Bill 2013 by the Union Cabinet has set the developers seeing red as the Bill largely proposes measures favouring consumers. The Bill, which is yet to be approved in the Parliament, aims to create a regulator and an Appellate Tribunal for the housing sector, for protecting consumer interests.

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It will also provide a uniform regulatory platform in the real estate sector which is currently mired in corruption, black money, red tapism and cartelisation. The regulator, to be set up in every state, will ensure that private developers get all their projects registered with it before sale and only after obtaining all necessary clearances.
Also, the Bill will ensure sale of immovable properties in an efficient and transparent manner in the sector. Will Realty Bill impact developers?
The Bill will definitely impact developers, but on the positive note, it will protect customers against unscrupulous developers. On a negative note, it will make land aggregation for large projects even more difficult, said Rohit Poddar, MD, Poddar Developers in an interview to moneycontrol.com.
However, Ashutosh Limaye, head- Research & REIS, Jones Lang LaSalle believes the Regulatory Bill is unlikely to affect developers as a regulator’s main job is to ensure the interests of all stakeholders. Though, the bill is more inclined towards the buyer’s interest, yet it will also consider the interests of the developer. What will happen to brokers/agents?
The brokers and the real estate agents would now have to register themselves with the authority, added Rayomand Dastur, EVP, Shapoorji Pallonji Real Estate (SPRE).
Limaye however said that the brokers and the real estate agents will now have to offer value for the fee they charge. Are there any flaws in the Bill?
A major highlight of the Bill is to ensure mandatory registration of real-estate projects and real-estate agents with the authority, except when the land proposed to be developed is less than 1000 square meters. This provision is likely to provide another level of protection to buyers.
The worry here is that it could delay the project launch and will also add to the cost for the developer, who may then pass it on the buyers. Also, analysts fear additional registration and clearances could lead to corruption.
Though the Regulatory Bill will be a positive step, the extent of effectiveness and the implementation at the state level are possible hindrances going forward.
Cost of finance will go up for the developers which will eventually push the property prices but in the long run it will benefit both the consumer and the developer, added Limaye.
He also said that government should take measures to ensure easy funding for developers. “It should initiate institutional funding to the developers so that more realty projects are encouraged,” he added.
According to Dastur, the bill lacks any mention of a single window clearance to enable speedier approvals and permissions for the developer projects. Is giving realty regulatory right to State a better option?
The Bill includes regulatory authority given to the State instead of Centre, which might pave way for ambiguity as different States will handle the issue in a different manner creating difficulty for the Centre to take a single action.
According to Poddar, real estate is a State subject, so it should remain like that, but a system of single window clearance must be implemented.
On the other hand, Limaye added that the vast Indian population makes it difficult for the Centre to micro-manage, and so it will be easier for the respective state government to handle such issues themselves. Will realty regulator be a boon to the sector?
Good developers have been welcoming the Regulatory Bill by the government, as many buyers may now feel more confident about buying a property since their rights will be protected. 
However, Poddar feels the new Bill should not become another center for additional permissions. If implemented correctly and if suitable additions to the bill, such as single window clearance are introduced and properly implemented, then it will be a boon to the sector, he added. Is something similar required for commercial developers as well?
While developers feel that something similar is required for the commercial space as well, Limaye believes that in the long run this Bill itself may include the commercial space as well.
According to him, a major real estate portion is covered by residential property which involves issues like lack of transparency, residential development agreement favouring developers. Also, in case of commercial developers most of the property is acquired by the companies that are big, sufficient and better equipped, but in case of residential developers, the customers are individual buyers and so, better reforms are a must.
anjali.agarwal@web18.in