Companies & Sectors
Real Estate Act: Stakeholders not happy with the draft rules
The Real Estate (Regulation and Development) Act (RERA) is being touted as the ultimate saviour for buyers, but most stakeholders still have doubts over the draft rules for the RERA circulated by the government. 
 
According to Pankaj Kapoor, Founder and Managing Director of Liases Foras Real Estate Ratings and Research Pvt Ltd, the punitive measures (in RERA draft rules) have been eased out and there is no clarity on the extent of disclosure of the status of under-construction flats by developers. "Will the developer register with the latest sanctions or should the previous changes be accounted for? Will the consent of two-third of buyers for change in layout be applicable on existing projects? Will an already delayed project fall under the ambit of RERA? These are some of the pressing questions that still need to be answered. We hope the final draft addresses this ambiguity and the interest of buyers are safeguarded with retrospective effect," he said.
 
As per Mr Kapoor, the bone of contention this time is the nature of plan submitted by the builders. He said, "A particular group fighting for this pointed out that the draft rules lacked clarity as to which plan the builders of existing projects need to submit while registering with the regulator - the original, sanctioned plan or the latest version. We believe it is in the best interest of the buyers if the builders submit the original plans because the latest plan may have been revised many times. In addition, there is ambiguity over the schedule of completion of projects. There are penal clauses in RERA but in the absence of specific rules, the authorities will not be able to bring errant promoters to task."
 
In a report, the non-brokerage research centric firm, also highlighted execution delays, unfair pricing and recent judgements from consumer forums against developers. It said, "It is indeed intriguing to see that the National Consumer Disputes Redressal Commission (NCDRC) is dealing with errant developers with an iron hand. In the past, it brought Unitech and Lodha to task and now it is Jaypee Group, who is facing the music. While the Supreme Court has stayed the penalty order, two other rulings are still under review. However, it is sad that even with RERA looming on the one hand, and the consumer court rulings on the other, delays remain a bitter truth in the Indian realty sector. If the apex court does not retain the rulings of NCDRC, it may not give any further orders to defaulting developers in future. It is no secret that the sector cannot attain efficiency if execution delays and unfair pricing tactics are not sorted out right away."
 
"When we talk of affordability, we only talk about pricing in general," Mr Kapoor said, adding, "There, however, are many external factors beyond the control of a developer or buyer which affect affordability. One such factor is stamp duty and property taxes. While cities like Gurgaon saw a reduction in stamp duty a few months back, there are others like Nagpur, which await increased stamp duty and property taxes. While we are doing everything possible to boost affordable housing, state governments must do a thorough reality check to assess whether such increased levies are feasible at this juncture. If at all any increase in taxes and duties is unavoidable, the quantum of hike must be checked. The market is very price sensitive any such move may prove to be detrimental in the long run."
 
The report also highlighted the issue of vacant houses. The government declared that over two lakh houses, constructed under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Rajiv Awas Yojana (RAY), are still lying vacant. The highest number of vacant houses is in Maharashtra with 41,449 units, followed by Delhi (26,199), Gujarat (24,769), Andhra Pradesh (20,639), Telangana (17,982) and Uttar Pradesh (16,050). "This is one of the biggest anomalies of the real estate sector, where millions are homeless and slums are proliferating, while over a lakh units lie unoccupied. This is clearly indicative of a missing dimension in the cycle that needs to be addressed," the report from Liases Foras said.
 
However, there is also some news that added cheer to the market. Market regulator Securities and Exchange Board of India (SEBI) issued a consultation paper making various proposals to make real estate investment trusts (REITs) attractive. These include relaxation in pricing and valuation norms, minimum number of investors and increased investment in under-construction properties. "So far REITS have garnered tepid response from Indian players despite relaxations and flexibilities announced from time to time. It remains to be seen as to whether the current set of relaxations actually lures participants to REITS,' Liases Foras added.

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COMMENTS

Mitesh Shah

9 months ago

State or Central Govt just like a unified GST sud bring in a unified RERA bill where even the state or central govt comes into the picture when any builder fails to deliver the project . It is also to be seen that how many builders can really deliver with the right approvals & comveyance & OC given unlike Campa Cola Compound where the truth still lies hidden underneath .
Along with the builders there are also errant committee members who does not protect the rights of owners & act rampant against the home buyers instead of fighting in unity against the builders as has happened in Campa Cola Compound since 1985 when property tax was non-existant.

Ramesh Iyer

9 months ago

Real Estate is one sector where all corrupt netas and babus have parked their illicit money. This trend is not likely to change anytime soon. Hence, no law related to real estate will ever be buyer-friendly. This new RERA draft rules is no different. While most buyers invest their life's savings into a house to live in (till they die, usually), it's the real estate developers who are favored in the laws as well as rules. There isn't adequate punishment to reign in delinquent developers, who usurp buyers' money from one project to develop another (more lucrative for the developer), and even delay existing projects indefinitely under some pretext. Govt will never make laws protecting buyers' interests, which is obviously going to be "against" developers, for aforestated reasons.

Nifty, Sensex looking weak – Thursday closing report

We had mentioned in Wednesday’s closing report that Nifty, Sensex were still trendless. The major indices of the Indian stock markets suffered a correction on Thursday and closed with losses around 0.75% over Wednesday’s close. NSE trading volumes were high, indicating a broad-based correction from the point of view of investors. The trends of the major indices in the course of Thursday’s trading are given in the table below:

 

The markets were subdued during the mid-afternoon session on Thursday as volatility was induced by futures and options (F&O) expiry, coupled with negative global cues and the Jackson Hole Summit that kicks off today, where US Fed Chairman Janet Yellen is due to speak. Consequently, the key indices traded in the red, as selling pressure was seen in information technology (IT), automobile and metal stocks. The BSE market breadth was tilted in favour of the bears -- with 1,467 declines and 1,233 advances. On the NSE, on Thursday, there were 543 advances, 835 declines and 57 unchanged. 
 
Initially on Thursday, the benchmark indices opened on a positive note, in spite of mixed cues from their Asian peers and negative US markets. The markets also traded with apprehension as caution prevailed ahead of US Fed Chair Janet Yellen's speech on Friday -- a pointer to a possible interest rate hike, which can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India. In addition, the European markets fell sharply by almost 1.4%.
These factors contributed to the fall in the domestic markets.
 
The National Payments Corporation of India (NPCI) on Thursday said the Unified Payments Interface (UPI) will go live for customers of 21 banks. The relevant details of the service would be available on the website of 21 banks, the NPCI said. According to NPCI, the UPI application of 19 banks can be downloaded from Google Play Store in next two to three working days. The Bank Nifty fell by 0.27%.
 
Country's largest lender State Bank of India (SBI) on Wednesday said in a filing to the Bombay Stock Exchange ”..the Committee of Directors for Capital Raising at its meeting held on August 24, 2016 authorised the Bank to raise upto Rs11,100 crore Additional Tier 1 capital, by way of issue of Basel III compliant Perpetual Debt instrument in USD and/or INR, at par, through private placement to overseas and/or Indian investors,..". SBI shares closed at Rs250.05, down 1.81% on the BSE on Thursday.
 
Tata Sons' Chairman Cyrus P. Mistry on Wednesday said the Tata Group is looking for an investment opportunity in West Bengal. "I think the opportunities have to show themselves, and when they do, irrespective of the political environment, we will make the decision to invest," he said. Relations between the Tata group and West Bengal's ruling Trinamool Congress had become unpleasant after Tata Motors abandoned the Nano project at Singur in Hooghly district of Bengal in 2008 following persistent opposition from party supremo Mamata Banerjee on the land acquisition for the project. Banerjee opposed agricultural land acquisition and asked Tata to return 400 acres, out of 1,000 acres acquired for the project, to the farmers. The matter is still before the Supreme Court. Tata Motors shares closed at Rs493.75, down 0.85% on the BSE.
 
Tata Global Beverages Ltd (TGBL) is considering the restructuring options of its China operations, company Chairman Cyrus P. Mistry said on Wednesday. " In what way that restructuring will be done is yet to be seen. We are exploring multiple options," Mistry said while in response to a shareholder's query at the company's 53rd Annual General Meeting. Challenges exist in the China joint venture operations, Zhejiang Tata Tea Extraction Company Ltd. "Delays continue in stabilisation of the China business," said the company's latest annual report. The company’s shares closed at Rs140.50, up 0.11% on the BSE.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

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IIT-B names, shames start-ups reneging on job offers
In an unprecedented move, the Indian Institute of Technology-Bombay (IIT-B) on Thursday released the names of nine companies it had blacklisted for allegedly going back on plum job placements they offered to its students.
 
These companies, most of them start-ups, were blacklisted for one year for various reasons, IIT-B spokesperson Falguni Benerjee-Naha said.
 
The erring companies are LeGarde Burnett Group, which had revoked its job offers and was later found to be fake.
 
Companies LexInnova and IndusInsight delayed the joining dates given to the selected students, Banerjee-Naha said.
 
The others who are said to have revoked job offers are GPSK, Johnson Electric of China, Portea Medical, Peppertap and Cashcare Technologies. 
 
One firm, Mera Hunar, came up with a different name and hired the IIT-B students for another start-up.
 
The list of nine companies named on Thursday is not final and more could follow depending on their responses in future, she said.
 
It is the first time a prestigious institution like the IIT-B has published a list of blacklisted companies for reneging on job offers to its passouts.
 
The matter had been under review for a couple of months after these companies defaulted on their job offers and was discussed at a recent national-level conclave of all IITs in the country.
 
Taking a cue from IIT-B, other IITs are expected to follow suit and announce their own lists of companies that have gone back on their placement commitments.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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COMMENTS

Kisan Karnad

9 months ago

These are probably start ups which use hiring intent to drum up cash flows from potential VCs.

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