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

2 years 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

2 years 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.

RBI preparing framework to ease flow of credit to MSMEs: Mundra
The Reserve Bank of India (RBI) is preparing a framework to provide accreditation to credit counsellors for facilitating easy flow of credit to the MSMEs (Micro, Small and Medium Enterprises), its Deputy Governor S.S. Mundra said here on Tuesday.
 
"For bridging the information asymmetry on the MSME borrowers side, RBI is initiating a process for putting in place a framework for accreditation of credit counsellors who are expected to serve as facilitators and enablers for micro and small entrepreneurs,” Mundra said at the 2nd national conference on MSME funding organised by the Confederation of Indian Industry (CII). 
 
“Since MSMEs are typically enterprises with little credit histories and with inadequate expertise in preparing financial statements, credit counsellors will assist the borrowers in preparing their project reports and also help banks make better informed credit decisions,” he added.
 
Mundra said that RBI is also in the process of issuing final guidelines on P2P (peer to peer) lending in the MSME sector. 
 
"New players have entered the MSME lending landscape in form of P2P companies. RBI has been mindful of a need to regulate these entities without stifling their ability to innovate and is currently in the process of issuing final guidelines on P2P lending,” he said.
 
“These entities use an online platform to match lenders with borrowers to provide unsecured loans and mostly for receivables financing,” he said.
 
Mundra said that P2P lending has great potential as an alternative form of low-cost finance as it can reach to the needy where formal sources are unable to reach or unwilling to lend.
 
In order to solve the problem of delayed payment to MSMEs, RBI has licensed three entities for operating the Trade Receivables Discounting System (TReDS). 
 
“The system (TreDS) would facilitate the financing of trade receivables of MSME enterprises from corporate and other buyers, including government departments and public sector undertakings (PSUs) through multiple financiers,” he said.
 
The objective is to create Electronic Bill Factoring Exchanges which could electronically accept and settle bills so that MSMEs could encash their receivables without delay, he added.
 
It is expected that the TReDS will commence operations within this current fiscal. 
 
“It would be important that the use of TReDS is made mandatory for, to begin with corporate and PSUs and later for the government departments,” Mundra said.
 
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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Piramal Enterprises and Bain Capital Credit to pursue distressed debt investing in India
Piramal Enterprises and Bain Capital Credit have signed a Memorandum of Understanding (MOU) to create a strategic partnership to invest in restructuring situations in India, according to a release from Piramal. Once finalised, the platform will invest capital directly into businesses and acquire debt of such businesses to drive sensible restructurings. The sponsors believe that there is over an USD 1 billion investing opportunity in this space over the next few years.
 
The platform’s mandate would be to look at all sectors other than real estate as an asset class. Within these, the platform’s preference will be to invest in businesses that require restructuring and have fundamentally strong growth prospects linked to India’s infrastructure and consumption needs.
 
Both Piramal and Bain Capital Credit have significant experience and a long track record in investing.  Piramal has over three decades of experience of spotting early trends in investment opportunities, acting decisively and successfully creating value for all concerned shareholders. Bain Capital Credit has invested in this asset class for 15 years in North America, Europe, Asia and Australia.
 
Shantanu Nalavadi, an experienced investing professional with 25 years of experience in India and currently Managing Partner of Piramal Capital, will lead this strategic partnership.
 

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