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The passing of the longpending Real Estate Regulatory Bill, which was being hotly debated and second-guessed for far too long, is an unequivocal victory for the Indian real estate sector. Its enactment as a law will almost singlehandedly revamp the way this sector works across the board, from developers, end-users and investors to lending institutions and government agencies involved in the buying and selling of property.
It is by far the most decisive step the sector has taken towards transparency and reaching towards the kind of standardised processes, procedures and accountability guidelines that the industry requires to progress.
In December 2015, several amendments to the bill suggested by a select committee of Rajya Sabha, the upper house of the parliament of India, had been accepted by the Union Cabinet. The amended bill has now become a fullfledged lawand paved the way to setting up a real estate regulator. The industry welcomes the major reform that promises to bring in much-needed transparency and accountability to the rather opaque real estate sector. It will create a much-needed consumer right protection umbrella for buyers of real estate, thereby increasing consumer confidence as well as creating lasting developer brands strong on quality and timely delivery of their projects. As there will be strict punishment for errant developers as well as fines for project delays and faster redressal to consumer complaints, the problem of unscrupulous elements in the industry will be addressed. Norms on size of projects had been relaxed from 1,000 sqm to 500 sqm, and further reduction in size can be brought under the purview of the regulator by state governments.
A single-window clearance is needed now, without which there may be cases, where bona-fide delays by developers may still result in an unfavourable penalty. The time taken to get many environmental, state-level and municipal-level clearances have afflicted developers for long. Without ensuring that the approval process is not delayed by civic agencies’ inaction or setting up a singlewindow system, the regulator may inadvertently add another layer to the longer processes already delaying projects. The central government, on its part, has been working to streamline approvals as part of its focus on ‘ease of doing business’ and digitisation to achieve better transparency. This law will reduce volatility seen in this sector and build the trust deficit between both stakeholders, builders and buyers.
With real estate having linkages to the largest number of industries, the incumbent government has succeeded against various odds and given Indian real estate its most valuable card. The bill is a verdict to end the age of information asymmetry, lack of accountability and unwarranted project delays, and marks the beginning of rising transparency, liquidation of assets -and, importantly, positive sentiment.
Source: Anuj Puri, Special to PW
The author is the Chairman and Country Head, JLL India