The sheer scale of manpower, money and monitoring team needed to regulate and monitor the huge real estate sector would be stupendous. Has the government assessed the true scope of work

The Real Estate (Regulation and Development) Bill, 2013, approved by the Union Cabinet aims to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects. While this looks good on paper, the real question is who is going to collect the humungous data required to bring to record 30 crore square feet of construction that is planned across India?

While speaking at a seminar organised by Moneylife Foundation on decoding the Bill, Pranay Vakil, noted property expert and former chairman of Knight Frank India, admitted that the registration of properties of about 30 crore sq ft across the country is really going to be a tough task.

The 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 Real Estate Regulatory Authority (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 where the real challenge emerges. 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. Who will foot the bill of employee cost, infrastructure like computer systems, offices, transportation and communication, especially since the regulators would have to be set up by each state?

State Issue

That leads to another issue. The quality of information may not be the same across all the states. All the disclosures are supposed to be mandatorily submitted to the RERA. However, it is not the union government, who would set up the RERA but the states.

A press note issued by the government states that "Establishment of one or more ‘Real Estate Regulatory Authority’ 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".

Similarly, the state governments are expected to establish Appellate Tribunal to hear appeals from the orders or decisions or directions of the Authority and the adjudicating officer. The Appellate Tribunal 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.

One of the issues that could put breaks on setting up RERA and the Appellate Tribunal is the cost factor. As per the Bill, the state government should set up RERA and Tribunals. But the states would be too reluctant to bear the financial burden on setting up these authorities, unless the Centre provides sufficient funding. (Remember, the Prize Chits and Money Circulation Schemes (Banning) Act or PCMCS Act, 1978. It is a Central Act, which is expected to be enforced by the states. And except for a few, not many states are interested in this.  )

In short, cost, the extent of effectiveness and the implementation at the state-level would emerge as hindrances for the Bill going forward.
 

Read more about the Real Estate Regulation Bill:
 

• A bulk allottee or buyer will also be considered as a promoter causing confusion

• Will the regulation really exclude commercial property?

• Registration of brokers: Huge challenges ahead

• Moneylife Foundation event on decoding the realty regulator

• Here is the Real Estate Bill, kept hidden from public
• Centre and states may collude on parallel laws, cost