There are some differences between the Central Bill and laws proposed or already present in various states with regard to housing. Maharashtra uses built up area in its Ready Reckoner, while the central Bill uses carpet area. In addition, states will have to foot the bill for setting up and running the regulatory authority and appellate tribunal under the proposed Act
The Real Estate (Regulation and Development) Bill (Realty Bill) recently passed by the Union cabinet fails to provide clarity on several issues that the state governments are expected to implement. The conflict is not limited to Central and state laws, but also reaches to the basic definition of area under sale.
For instance, the Ready Reckoner of the Maharashtra government uses built-up area for referring area under sale, while the Realty Bill talks about carpet area. Carpet area is the area enclosed within the walls, while built up area covers carpet area plus walls and the balcony. (As per the Bill, ‘carpet area’ means the net usable floor area of an immovable property, excluding the area covered by the walls.)
Pranay Vakil, founder chairman of Praron Consultancy and former chairman of Knight Frank India, while speaking at a Moneylife Foundation seminar said there would be some issues (for the Realty Bill) like jurisdiction, registration and control of developers with multi-state operations besides conflict between central and state laws. In his words, the Realty Bill, which is a huge step forward in terms of consumer protection, would need some ‘debugging’.
There are areas of conflict between the central and state laws that also need to be debugged. Last year, both houses of the state legislature passed the Maharashtra Housing (Regulation and Development) Bill (MHRDB), which at present is awaiting the presidential nod.
According to media reports, Sachin Ahir, (minister of state for housing), Maharashtra, and few other states too have objected to the Realty Bill due to difference in conditions and development control regulations for different cities.
“We do not know in what form the Realty Bill will be imposed on states, whether it will be a nodal law or a law that will supersede what the state government has proposed. We will decide what next once we get information from the Centre, once we get the minutes of the Cabinet meeting,” Ahir had said.
While the MHRDB seeks to safeguard interests of home buyers and bring transparency in real estate deals by setting up a housing regulatory authority and a housing appellate tribunal, the central Bill also proposes the same.
A press note issued by the Union government states that “Establishment of one or more ‘Real Estate Regulatory Authority’ (RERA) in each state/UT, or one authority for two or more states/ UT, by the appropriate government, with specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest”.
While speaking at the Moneylife Foundation seminar, Parimal Shroff, who has over 37 years’ experience in constitutional, corporate, civil and property law, pointed out that the Central Act is “too ambitious”. He said, the functions of RERA includes administrative, advisory, executive, judicial and regulatory and it needs to be rationalised as it can be overburden by solving smallest to largest issues across the country.
In addition, the state governments are expected to establish Real Estate Appellate Tribunal (REAT) to hear appeals from the orders or decisions or directions of the authority and the adjudicating officer. The REAT should be headed by a sitting or retired Judge of the high court with one judicial and one administrative or technical member. This is also not practical, especially looking at the dearth of high court judges today.
According to Ahir the central Realty Bill was largely based on the housing bill proposed by Maharashtra. He said, the only major difference was the MHRDB sought to equate the appellate tribunal with a civil court, while the central one did not. Instead, the Realty Bill provides same powers to RERA as vested in a civil court while trying a suit.
One of the issues that could put brakes on setting up RERA and the REAT is the cost factor. As per the Bill, the state government should set up RERA and tribunals. However, the states would be too reluctant to bear the financial burden on setting up these authorities, unless the Centre provides sufficient funding.
The Realty Bill says, “The state government may, after due appropriation made by the state legislature by law in this behalf make to the authority, grants and loans of such sums of money as the state government may think fit for being utilized for the purposes of this Act.”
In addition, the appropriate governments are expected to constitute “Real Estate Fund” and shall credit all government grants received by the authority, the fees received under this Act and the interest accrued on these amounts.
Salaries and allowances payable to the chairperson, other members as well as officers and other employees of the RERA and REAT and administrative expenses would be paid from the Fund.
While there is no mention on any budgetary support for establishing the RERAs and REATs, the question is will there be sufficient funds for all the expenses, like employee cost, infrastructure like computer systems, offices, transportation and communication. Especially, in states like Maharashtra setting up RERA and REAT with meagre funding would not only prove a hurdle, but also sabotage entire purpose of the Realty Bill.
The Realty Bill demands greater disclosure from the developers and a higher level of project accountability to remove the information asymmetries from the property market. There is also mandatory registration of all real estate projects and real estate agents who intended to sell properties, with the RERA.
For each project, the developer must disclose details of the promoters, project, layout plan, plan of development works, land status, carpet area and number of the apartments booked, status of the statutory approvals and disclosure of pro-forma agreements, names and addresses of the real estate agents, contractors, architect and structural engineer.
This is another area that could pose challenges. Monitoring whether all the projects that fall under purview are actually submitting themselves for registration would be a huge task. Even creating and maintaining data would require trained employees. And this would not be possible without adequate funding.
Read more about the Real Estate Regulation Bill:
Marry in haste and repent at leisure is a popular saying. One fact that takes a toll on modern marriages that are increasingly ending in divorce is financial incompatibility. Here is a look at the stress points that may develop in relationships
That marriages are made in heaven is now passé in India too. Today more marriages result from romances that bloom at the workplace and on social networks. Often, the boy meets girl; they fall in love at first sight and move into a live-in relationship—no questions asked or explanations sought. In the traditional situation it was left to the elders of the families to carry out discrete inquiries into the social standing, financial status, character, et al, besides the customary matching of horoscopes before moving a formal proposal. All castes and communities generally followed this modus operandi, with slight local variations, across the country.
In the changed milieu, boys and girls of today do not hesitate to present their parents with a fait accompli—“Dad and Mom meet … with whom I’ve fallen in love and plan to marry.” This proposition generally is reluctantly accepted by the elders—sometimes with a bit of sane advice to spend more time in getting to know one another better before plunging into matrimony and to remind impetuous youngsters that marriage is a long-term relationship not only between the two of but it binds their extended families as well.
In these days of Double Income couples, it is imperative to pay attention to Financial Compatibility well before marriage, instead of repenting later. Financial incompatibility often becomes a festering sore; it magnifies even the smallest difference of opinion into a time bomb that ultimately explodes and results in a break-up.
Ascertaining each others’ financial compatibility is not at all difficult. All it calls for is some clear-headed observation, gently probing and discreet inquiry about the lifestyle and spending habits of one another. It is easy to notice whether someone follows the basic financial discipline of living within one’s means or splurges on fine dining, partying, clubbing, designer clothes and accessories such as watches, glasses, high-end gizmos such as mobile phones, laptops, jewellery, luxury holidays. Unchecked spending is invariably a red flag that lead to debt traps—especially if the spending is through credit cards.
On the other hand, there can be extreme miserliness in the name of frugality. Cribbing about spending on essentials or forever claiming to have forgotten one’s wallet or being short on cash—this is another extreme and just as bad. There is no need to hire the services of a private eye to notice these traits. If you are both high-spenders, you can go into a debt trap together; if you are both miserly, you may manage actually work out quite well.
The take-home pay or monthly income
For starters, think seriously about your own salary and that of your would-be partner. Don’t get carried away by fat “compensation packages” calculated on the basis of “cost to the company’’, which can be extremely deceptive. Your spending money is the net take-home after all deductions that is credited to your bank account.
If in business or profession, to ascertain its nature and source of income are also important—it could as well be a shady, fly-by-night business. The market standing of the business needs to be ascertained by independent enquiries.
Unlike their parents for whom the very terms borrowing and incurring debts are anathema, the new generation has the advantage of easy access to personal loans that provide a jump-start to creating assets or acquiring necessities.
Today, it is easy to obtain hefty home loans invariably mortgaged on pooled income of the couple soon after marriage. Often you can get personal loans to pay for expensive interiors and the latest gadgets also funded through EMIs. It results in starting ones married life heavily in debt. Pre-existing liabilities such as an outstanding education loan, outstanding or guarantees provided for others, can be stumbling blocks that need to be factored into enquiries.
Another propensity for debts will be evident from the presence of multiple credit cards in anyone’s wallet—a clear indication of an individual’s credit dependence. Plastic money is indeed a very convenient mode for acquiring practically anything and everything without having to shell out money upfront, forgetting that there is no such thing as free credit. Problems arise when the payments fall due; unpaid bills carry penal interests that can go as high as 40% pa or more.
Ideally, not more than a fifth of one’s income should go for debt servicing EMIs for the simple reason there has to be enough left for other domestic needs, medical emergencies, savings and investments.
Couples who borrow together—especially their hefty home loans—must remember that one financially reckless partner can ruin the credit history and credit score of the other. This has serious, long-term consequences that outlast a bad marriage by almost a decade. A default on your credit history puts an end to future borrowings in India today.
Contributing to the family kitty
Unlike those living in the West, in India it is still customary to live in a close-knit joint family comprising parents and siblings. Everyone who starts earning is expected to contribute to the family expenditure, including medical and educational spends. Some sons even continue send monthly remittances to their parents as tokens of their love and affection. It is also not unusual for the earning unmarried daughters to chip in too till they move out or to help put together a nestegg for their own wedding expenses.
It is important that both partners are clear, upfront and in agreement about continuing monetary contributions to their respective families, otherwise they become sore points later. Both partners also need to discuss and communicate with their families whether or not they wish to continue living in a joint family. While breaking away from a joint family was considered a major betrayal just a few decades ago, the easy availability of home loans has now made it a norm. In fact, the joint family now exits either out of economic necessity or among the super-rich, with sprawling homes.
Being forewarned of the potential pitfalls this is just what young couples ought to go about by first ascertaining the financial compatibility of their would-be partners.
A check list of suggestions
Most of all that is said here is based on hard core real life experiences and certainly not fiction—a red flag on the road to matrimony!
(Nagesh Kini is a Mumbai-based chartered accountant turned activist.)
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