Will the Realty Bill Make a Difference?

Sucheta Dalal 14 April 2015

A ray of hope for hapless homebuyers

The Union Cabinet has cleared The Real Estate (Regulation & Development) Bill which had been languishing under the United Progressive Alliance government. The Cabinet clearance comes at a time when there is irrefutable evidence of a severe slowdown in the sector, especially in the sale of apartments. Although India continues to have an acute shortage of residential houses, property prices, in most cities, have been ramped up beyond the reach of ordinary Indians desperate to own a home. But the builder lobby, which is well represented in parliament and state assemblies, across the entire political spectrum, won’t give up easily. So, it remains to be seen whether the Bill makes a smooth passage through both houses of parliament.

The IIMB Magicbricks Housing Sentiment Index recently showed that nearly 50% of potential buyers are waiting to see some clarity in price trends, but the sellers surveyed remained bullish. The frank reality, revealed by the index, was the sharp decline in prices across Tier-1 cities in India since May 2014. There has been a 20% decline across most cities; the sharpest correction has been in Gurgaon (38%) and Noida (34%). A significant part of this has happened recently, after the Union Budget at the end of February 2015.

Will the Real Estate Bill check rampant malpractices and black money in the realty industry and safeguard consumer’s interest? For starters, the real estate regulator will require registration of all property developers and real estate agents in order to regulate them. It promises to bring accountability and transparency in real estate transactions with steep fines (going up to 10% of the project cost) and imprisonment of up to three years for various violations.

However, some fundamental problems are likely to remain. Several issues relating to land acquisition, registration, transfers, taxation and a plethora of permissions and clearances will remain with state governments and municipal authorities. There is rampant corruption in each of these processes and Central legislation is not going to address many of these issues. If the new legislation merely brings in additional cost and compliances without making the process of acquiring and developing real estate projects simpler and cleaner, it could end up adding to problems instead of resolving them.

At a time, when the government is struggling to get Bills passed in the Rajya Sabha, it is hard to imagine that it can get states to cooperate and put in place the requisite for registration and adjudication of issues. And, yet, the mere process of forcing builders to register projects, upload building plans, land ownership and statutory approvals and clearances in the public domain and the registration of real estate agents will bring the much-needed transparency that could set the stage for tighter regulation and smoother transactions in the years to come.

Comments

User

manoharlalsharma

1 decade ago

Will the Realty Bill Make a Difference? ONE MORE BOOTH LIKE A POLICE CHOWKY TO MAKE COMPLAINT AND THEN TO NEGOTIATION OR TO FIX HAFTA.

R Balakrishnan

1 decade ago

Yet another eyewash. Bill is drafted by the builder lobby. With most legislators having interest in the real estate business, they won't take the axe to their own feet. Govt will put it up as one more 'achievement '. This bill is a joke on the consumer.