Are you a victim of delayed project by developers Where do you turn to Do you think there is a need for a real estate regulator in India Developers are wary of this as they feel a regulator will be particularly harsh on builders as against other stakeholders. Kumar Gera, president of Confederation of Real Estate Developers’ Associations of India (CREDAI), voices his skepticism: “There is no harm in having a regulator, provided the objective is to ensure that all parties responsible for the successful completion of a real estate project fulfill their respective obligations. The parties I refer to are the developer, the local authority, the service providers, the purchasers, and the financing agency. It is only when all these parties do what they are obliged to do that a project will be successful. If any one of them fails, the desired result is not achieved. Hence, all responsible parties need regulation under the same act or bill. If this is not done and only a developer is targeted, the desired results cannot be achieved and it will be one more bottleneck in the system.” Ashiana’s Vishal Gupta reiterates this point and says that this will only create another level of authority leading to more delays, red tapism, and higher cost ,which will be ultimately counterproductive for end users. He says that by doing this, we are challenging the competence of existing authorities who regulate real estate at local level, as now, every developer needs to get his project plans sanctioned, land use changed, get license for construction, follow building bylaws, and get a commencement and a completion certificate. He suggests that instead of a regulator, we need a fast track consumer redressal court where justice is dispensed, as real estate investment is the single largest investment a person makes in his lifetime. Giving another perspective, RE/MAX (a global network of brokers ) India’s Samir Chopra feels that a regulator would help eliminate anomalies in the existing legal system due to multiplicity of authorities and procedural complexities. He says this federal regulatory body cannot hold responsibilities like providing guidance on policy framework, resolution of stakeholders’ concerns, and consumer rights’ protection. “Broadly, an independent regulator with clearly set guidelines and directives to follow will ensure fair competition and protect the interests of builders, brokers, investors, and above all – consumers. The model regulation could have a quick redressal mechanism for real estate industry, which is often faced with a litany of disputes.” Some industry insiders also feel that having a regulator may not solve the problem and there are enough regulations at present. According to Sharad Jhingan, COO of Pvt Equity Fund at Lanco Infratech Ltd, “The real issue is enforcement and enactment of regulations.” He adds that there are several regulations for a lot many things now, despite which real estate developers have major time and cost overruns in their projects. Besides, they continue to violate norms by indulging in prelaunch or assuring a fixed return on investment, thereby acting more as NBFCs (non-banking financial companies). Cut to the consumers, and they badly want someone to lend a voice to their woes when they are at the receiving end. According to an MNC executive, Manish Khurana, “We people put all our savings into a property, which can turn out to be a big risk in this highly speculative market. It’s high time real estate sector got organized and our rights protected.” Consumers feel a regulator will not only lend a voice to consumers, but also help in creation of a more transparent market and hold developers accountable. According to Akash Kapur, an investor: “When telecom, petroleum and civil aviation industry are doing well with a regulator – the end user is a beneficiary. Also, it provides a level playing field for market players. It’s high time the real estate industry is regulated.” Deepak Parekh, chairman of HDFC, has been very vocal about a regulator. He feels that the regulator’s primary role should be to ensure adequate consumer protection in any case of real estate fraud. Today, the only recourse a consumer has is either a consumer court or a civil court, both of which can take ages before a case even comes up for hearing. Thus, there is a need for basic consumer protection for an individual’s largest investment in a physical asset. Drawing a simple parallel, Parekh says that a person who sells you a mutual fund product, irrespective of the amount invested, has to be registered with the Association of Mutual Funds of India and has to clear an advisory module exam. Similarly, insurance agents have to be licensed and go through mandatory training and an examination under the auspices of IRDA. But when one buys a house, there is no regulator to ensure that the transactions are in order. All that a common man relies upon is good luck and trust. A regulator needs to ensure best practices and transparency within the sector.For instance, the regulator can mandate that all apartments be sold only on the basis of carpet area and not super-built-up area. Further, the real estate regulator can ensure that projects are completed on time and clear titles are given to consumers. The next q u e s t i o n which arises is that since real estate is a state subject, will a regulator have to be set up at the state level. “Admittedly, the logistical challenge with setting up a real estate regulator is that it will have to be done at the state level. Again, at the state level, there will be a need to coordinate with municipalities and other local bodies. But even if each state has its own regulator, there should be a national body that will promote best practices and oversee the functioning of the state-level real estate regulators. Citing a relevant example, he says it happened with electricity. How did so many states agree to break transmission, distribution and generation chain Initially, only one or two states were willing to do the trifurcation, the rest were not. Again, it happened because the Centre promised states funds under APDRP (accelerated power development and reforms programme), if they went through the trifurcation. When there is something like that ,states comply, because they want cheaper money or they want grants or something. The same model as in electricity, where you have the Central Electricity Authority and then the state regulators, can be adopted for real estate,” says Parekh. Source:https://mail.google.com/mail/?shva=1#inbox/12731655d20fbdf1 Filed under: Builders/ Developers Tagged: Real estate in india
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Time for a realty regulator
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