Regulations
Why the Real Estate Bill is still half a bridge of hope
While the bill tries to protect consumers, slow approvals are a major reason behind delays and increasing cost of property. The Bill does not address this
 
The Union Cabinet has finally cleared the Real Estate (Regulation and Development) Bill, which is being planned to be tabled in the winter session of the Parliament. In a note on the bill, Liases Foras Real Estate Rating & Research Pvt Ltd, said, "While the bill protects consumer interest, faster approvals are also crucial for developers to prevent delays. Against this backdrop, regulatory authorities aim to promote single window system of clearances for real estate projects, wherein the projects and promoters both can be graded along with digitisation of land records. However, the bill has a long way to go as far as faster sanctioning process is concerned. Thus, the problem is only half-solved." Also, after it becomes an Act, it’s the State’s responsibility to bring it to effect by appropriate measures, Liases Foras added.
 
According to Liases Foras, "...project delays are the Achilles’ heel of Indian real estate and one of the key reasons for sky high prices. As far as responsibility for delay is concerned, it lies with both the developer and the government authorities. Thus, if we look at the larger picture, the delays in execution also have a negative bearing on India’s gross domestic product (GDP)," Liases Foras says.
 
In June 2013, while speaking at a Moneylife Foundation event on the Bill, Parimal Shroff, with over 39 years’ experience in constitutional, corporate, civil and property law, had called the Central Act as “too ambitious”. He had said, "It (the Bill) proposes that all permissions, information, online declarations and registration are to be validated before the project starts. The penalties for failing to comply are too severe. Then, it requires that the plans and designs to be put up online—this gives rise to problems related to protection of intellectual property and security”.
 
The real estate sector in India faces some fundamental issues, which are not fully addressed in the new amended Bill. This includes, issues relating to land acquisition, registration, transfers, taxation and a plethora of permissions and clearances that would remain with state governments and municipal authorities. There is rampant corruption in each of these processes and Central legislation is unlikely to address many of these issues. But first the positives of the Bill.
 
The Positives
 
The Bill is based on three major foundation stones, transparency, accountability and efficiency. Compulsory disclosures and registration ensures transparency, while taking responsibility in case of any unwarranted deviations in the process ensures accountability. Together, these elements generate efficiency by discarding any kind of deception in prices. 
 
"Firstly, it may usher sales on carpet area, which is a practice followed in the developed countries including Singapore and UK. Secondly, the escrow account will help in curbing diversion and misuse of funds, ruling out speculative practices," Liases Foras said.
 
Another important aspect of the Bill is the redressal mechanism, addressed through adjudicating officers and Appellate Tribunal. Discontented buyers can now approach 644 consumer courts at the district level instead of only the Regulatory Authorities proposed to be established mostly in capital cities. This makes it convenient for buyers and reduces the costs of litigation. In addition, the Bill marks a provision for imprisonment of builders and real estate agents in case of violation of rules.
 
 
Delays 
 
However, the Bill does little to address the major cause of high real estate prices: delays in obtaining approvals.
 
A study conducted by Associated Chambers of Commerce and Industry of India (Assocham) show that over 75% of the total 3,540 projects, worth Rs14 lakh crore, have remained non-starters. "On an average, real estate projects in India are facing a delay of 33 months in completion," DS Rawat, secretary general of Assocham, had said while releasing the study report.
 
According to the study, over 2,300 projects in the realty sector remained non-starter, while over 1,000 on-going projects have registered significant delays in completion.
 
In its analysis of total supply across 25 cities, Liases Foras found that there is a delay of more than 12 months for about 34% of the supply. This estimated delay of residential projects amounts to 1.32% of the estimated GDP (2014-15) at current prices, it said.
 
In addition, there is the issue of unsold stock. Liases Foras says, even in the current depressed state of market, primary supply worth about Rs18.47 lakh crore or over 99% would come under the purview of the Real Estate Regulatory Bill. "There also exists a secondary market, which we estimate is of an equal size. So, the quantum under the Bill’s ambit is huge. Also, the revised bill includes compulsory registration of projects of 500 sq. metres or 8 flats, against the previous norm of 1,000 sq. meters or 12 flats. With a vast universe under coverage, the bill is expected to have far-reaching positive effects on execution and accountability," it added.
 
 
Construction and sale of an apartment, which is the base of real estate sector, has the capacity to catapult the growth of an entire ecosystem on its own. Once the execution delays are reduced considerably, housing sales will receive a boost, the agency feels in three ways:
 
  1. Increased sale of houses create ancillary demand. There will be automatic demand for furniture, consumer durables, fit-outs, automobiles, fibre optics and telecom companies.
  2. This will spur job creation and expansion of industries giving a boost to commercial segment. Benefits of this will also trickle to retail realty as increased income implies enhanced purchasing power.
  3.  An upbeat economy with a functional regulatory mechanism will place India on a global footing and make it one of the most sought after destinations for international investors.

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COMMENTS

vswami

12 months ago

In the Realty Regulatory Bill, not even a whisper made about, or measures of reform factored in, for ushering in any change or improvement in certain procedural legal formalities promoters are obligated to strictly comply under the respective special laws governing Flats and Apartments. Hence the need for sharing,once again,though at this late hour :

The opinion of an expert on the property law as found @ http://www.lawyersclubindia.com/…/Stamp-duty-for-conveyance…
goes to reinforce, in substance, the same basic viewpoint as set out in the several personal Blogs, in public domain, and websites

For ready reference, given below is an extract from what Expert raj kumar makkad says:

Q

It is the duty of the Builder to form a Society or any other legal body ....About 80,000 Housing Societies are waiting for a quick and easy remedy and that has paved the way for Deemed Conveyance.

Only after executing the Conveyance, the legal ownership of the land and building will be with the Society; till such time, the Society will have only possession rights without any legal rights for redevelopment or for earning any commercial benefit.

There are five stages to complete the Conveyance of land and building in favour of the Society even under Deemed Conveyance.......
A Special Cell has been started by the Maharashtra Societies Welfare Association....., to provide guidance on Deemed Conveyance. ....

UQ

Note: The Expert has, in a simplistic manner, stressed that ”till such time, the Society will have only possession rights without any legal rights for redevelopment or for earning any commercial benefit". However, in the nature of things, the better or logical conclusion would be that, till such time final conveyance takes place in favour of 'Society' or 'Owners' Association' , 'absolute ownership' cannot be regarded to have become vested in the purchasers; so much so, the purchasers cannot, if strictly viewed/ construed, rightly claim to have acquired all such rights and interests (not merely the two such rights as found mentioned/shortlisted) as are supposed to pass on/devolve only along with profoundly "absolute ownership".

To be quite precise, the 'society' in the case of Flats, and the 'owners' association' if apartments, ought to have been duly formed and registered , strictly as required by the special enactments, so that the final conveyance of the 'property' in favour of such society or association could be effected; as, otherwise, the final conveyance could never be effected / take place - that is, would remain incomplete.

It is a matter of great regret and disappointment to realize that, while Maharashtra has shown the righteous way, the Karnataka government,- to be precise its concerned authorities, though duly vested with necessary powers,- has thus far remained woefully mute, and disparagingly immune ; despite the matter being undeniably of the utmost importance from the viewpoint of public interest (in its true sense).

PRAKASH D. BASRUR

12 months ago

In all such discussions the buyer's views are not mentioned ! The article fully depends upon the views of an agency which is on the side of the builder/developer lobby ! The agony gone through by the actual buyer of houses for the last 60 years is well known to everyone including the writer , i.e. the unscrupulous ways of buyer's arm twisting by the builder/developers and the infamous "estate agents" ! That community comprises of shady elements is a very well known fact and over the years millions of property buyers have had to admit to the dictat of that developer/builder/agent nexus. Unfortunately neither the bill nor the writer of the article seem to have gone through the horrors that the property buyers have had to go through for last 60 years ! This is typical of our "blind folded" society's futile attempts in solving consumer problems through the round abut ways of our parliament of the people , by the people and for the people ! Jai Hind !

REPLY

Sucheta Dalal

In Reply to PRAKASH D. BASRUR 12 months ago

Every article will not have the buyers views. Moneylife has plenty more on real estate which represent the buyers point of view.

In addition, there is Moneylife Foundation, a NGO, where our legal helpline provides assistance on housing related issues.

Why not explore the work we do ? Check out foundation.moneylife.in

And finally, unless people get together to push for reform, nothing will change. We try to do it in our small way, but we need SIGNIFICANTLY larger numbers to be able to generate the right momentum.
So how about spreading the word about these activities? Most articles and the NGO are free -- so it costs nothing to join and help your self and people like you!

That does not mean that the foundation can run without financial support and donations -- but we can come to that later...

PRAKASH D. BASRUR

In Reply to Sucheta Dalal 11 months ago

Dear Sucheta !
I am already a small amount donor of your (our ?) NGO ! I have done about 10 deals in aquiring flats in Mumbai-Pune area and have had a bitter experience of dealing with the developer-builder-estate agent nexus in my active life of last 50 years ! I am sure you too have dealt with this "triangle" and got entangled into their web ?

Sucheta Dalal

In Reply to PRAKASH D. BASRUR 11 months ago


Dear Mr Basrur

Thank you for your support to Moneylife Foundation.

On the flat deals... we have been fortunate -- or probably followed what we preach... but thankfully not suffered.

Best wishes to you for the New Year.

Deepak Mahulkar

12 months ago

First of all, I have an apprehension about relation between project delays and high price. Everyone knows that Rates are quoted before commencement of project which inter alia means the builder envisages project delays at the time of inception. In case project gets completed within time, builder is benefited. When delayed, he is not at loss. Of late, most of the people in building industry are with political clout or dubious characters thus having no knowledge of construction or the policy. The delay is therefore obvious. Sanctioning authorities in Government further adds the delay.

RITENDRA KUMAR ROYCHOWDHURY

12 months ago

construction violating plan is the rule of the day. without the help of ruling political party it can not be happened.so new laws can be made but who will implement it?our country is govern by various lobby, one of them is the builder.

Mahesh S Bhatt

12 months ago

Strucural support for 5 years should have been 15 years minimum as life of the building is supposed to be 75 years.

Also no mention in terms of workmanship of other parts of construction such as external/internal water proofing.Poor tiling/plastering/accessories like sliding doors etc

Good Start 2016

Mahesh

vswami

12 months ago

IMPROMPTU

AS shared on Facebook;and HERE and http://swaminathanv208.blogspot.in/2015/...

satdin.in

12 months ago

no laws can be helpful unless builder-political-municipal nexus is abolished.almost every project is violating exiting law in one way or other. every body knows way?

Sabarimala temple's revenue dips after Chennai floods
There is a considerable drop in revenue of the famous Sabarimala temple due to the floods in Chennai, an official said on Friday.
 
Prayar Gopalakrishnan, president of the Travancore Devasom Board (TDB) which manages temples in the southern district of the state, said the temple suffered a loss of around Rs.15 crore compared with the same period last year. 
 
While in 2014 it had got Rs.108 cr by this time, the revenue collected in this season amounts to Rs.93 crore only.
 
"The floods in Chennai have been the main reason behind the drop as number of devotees from Tamil Nadu has dropped significantly," Gopalakrishnan said.
 
This year, the peak season began on November 17 and ends on January 14, 2016.
 
Situated on the mountain ranges of the Western Ghats, Sabarimala temple is four km uphill from Pamba in Pathanamthitta district, 100 km from the state capital.
 
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

Shirish Sadanand Shanbhag

12 months ago

Let Shabarimalai Temple Board, donate few lakh rupees to rehabilitate their flood affected devotees of Chennai, out of Temple fund.

India's official growth target cut, outlook on inflation better
Cautioning that challenges remain in the Indian economy despite progress, the finance ministry has sharply cut its growth forecast for this fiscal to 7-7.5 percent from 8.1-8.5, but said inflation remained under control.
 
In a mid-year review tabled in parliamnt on Friday, the finance minstry also said that the fiscal deficit target for the current fiscal will be met despite some setbacks on divestment but did not sound too optimistic on this front for the next fiscal year.
 
"Economy has made considerable progress but challenges remain. The government aims to meet fiscal deficit target of 3.9 percent (of GDP) without big expenditure cuts," said the report, authored mainly by Chief Economic Advisor Arvind Subramanian.
 
The earlier growth forecast was 8.1-8.5 percent, as estimated in the Economic Survey presented in February. Against this, the economy expanded by 7.4 percent in the second quarter of 2015-16 and 7 percent in the first quarter, according to official data.
 
On fiscal deficit, the report said a lower than expected expansion in the economy will by itself raise the target by around 0.2 percent of GDP, as this is indexed to the government's revenues and expenditure, even as a likely drop in divestment receipts will add to the burden.
 
The report said tax collections have been buoyant relative to the growth. "Indirect taxes have fared better than direct taxes."
 
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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