Puri said that the history of real estate in India will be written in two segments, pre and post RERA.
The real estate sector’s image has been marred by project delays, diversion of funds by developers and “broken promises” to home buyers who have invested their hard-earned money and the sector is currently witnessing the “final phases of a cleaning up”, said Union Minister for Housing and Urban Affairs Hardeep Singh Puri on Wednesday.
The sector has largely been opaque, with consumers often unable to procure complete information or enforce accountability against builders and developers in the absence of effective regulation.
“The biggest fallout affecting the sector is delay in project completion; diversion of funds collected from buyers; one-sided contracts in the absence of adequate supply; reneging on contractual commitments by both the developers and the buyers; and constraints in financing and investment options available to the sector, thereby affecting its long-term growth,” he said at a real estate conference organised by RICS on Policy, Reform and Regulation:the backbone of Indian Real Estate.
“Broken promises, incomplete housing projects tell a tragic tale of untold misery inflicted on hapless citizens who, in many instances, had pledged their lifetime savings and even the family silver just to own a house. We are still witnessing the final phase of a cleaning up process involving the misdemeanours of a few who tarnished the image of the many developers who were genuine in their dealings,” he said.
The Real Estate Regulatory Act is a pioneering legislation which will have a long-term transformative effect. “We have put in place an eco-system to ensure that real estate sector is properly governed and buyers are empowered. I have absolutely no doubt that the history of real estate in India will be written in two segments, pre and post RERA.
"The pre-RERA phase was characterised by the dreams and ambitions to own a house of many being dashed for a considerable period of time by a few persons exploiting that dream. We are not out of that phase yet,” he said. With regard to housing demand in the country, he referred to a technical study conducted in 2011 which placed the housing shortage at 18.76 million in urban areas, of which 96 percent is in the EWS segment and in LIG Housing.
Subsequent assessments led to a revision of this figure and in the final analysis, the shortage is likely to be around or in excess of 10 million units which is aimed to be addressed through the flagship programme 'PMAY’ (Pradhan Mantri Awas Yojana) Urban.
He said that the thrust of the mission has been to make available housing for the Economically Weaker Sections (EWS), Lower Income Groups (LIG) and also the MIG (Middle Income Group), by harnessing government land.
“We have also released various PPP Models to encourage housing through private partnership. Among the distinctive features of this scheme are that the government will make available the land and in addition provide a subsidy to each allottee and assist in obtaining easy financing from banks for the remaining sum required. The house will be in the name of the lady individually or co-jointly with the male member of the family. This will help gender empowerment.
"Besides, there are other measures that the government has introduced to provide an impetus to the sector. These include infrastructure status to affordable housing, the introduction of section 80-IA under the Income Tax Act and concessions with regard to long-term capital gains tax, " he said.The minister said, "A host of incentives have been provided, both to the developers and the homebuyers, and it is time that we see an action and result oriented approach from the industry."