Consultation on real estate regulation bill
The marathon meetings are still on between the housing ministry and industry stakeholders to finalise Real Estate (Development and Regulation) Bill. A day-long national consultation meeting was organized in New Delhi by the ministry of housing and urban poverty alleviation (HUPA).
Chaired by the minister Kumari Selja, the meeting had more than 100 participants from all over the country including representatives of state and central government ministries and departments, members of industry associations like CREDAI, NAREDCO, FICCI, PHD Chamber of Commerce, various consumer welfare organizations and legal and technical experts.
Selja said that the bill attempts to carefully balance the interests of both the consumers and the developers by imposing certain clear responsibilities on both of them. “The real estate regulator seeks to enforce public disclosure and brings in much needed transparency and accountability, while ensuring an enabling environment,” said Selja, adding that the bill also attempts at building confidence within investor and clients.
Further, along with the mandatory public disclosure, the first track dispute resolution mechanism is expected to speed up delivery of justice, which would further augment credibility, and facilitate larger investments in this sector in the long run.
The draft bill received more than 700 responses from various stake holders. Though there are differences in opinion regarding the precise modalities of the regulation, the majority have endorsed the need for a real estate regulator.
The Bill, which has been framed as a central legislation, aims at establishing a uniform regulatory environment for the real estate sector in the country to safeguard the interests of consumers and to promote planned and orderly growth of the real estate and housing sectors. The bill provides for the establishment of a state level regulatory authority in each state and aims to institute transparency and accountability in real estate and housing transactions by enforcing mandatory public disclosure, standardization and fair practices. While the sector has grown rapidly in recent years, much of this growth has been unregulated, with complaints of malpractices and lack of proper accountability on the part of builders and developers. The absence of standardization and professionalism has also constrained the orderly development of the industry. The bill is expected to ensure greater accountability towards consumers, significantly reduce frauds and delays, and pave the way for accelerated investments and growth of the industry in the long term.
Most speakers at the day-long consultation also welcomed and expressed support for the bill on the ground that it would enhance consumer and investor confidence, bring in standardization and catalyse greater investments from the formal institutional channels. A number of consumer forums and regulatory agencies including the Competition Commission and the National Housing Bank endorsed the provisions of the bill as it would bring in greater transparency in the functioning of the industry and remove information asymmetries. Representatives of the real estate industry including CREDAI and NAREDCO requested that the Ministry of HUPA may suitably address the issue of fast tracking the approval process for the industry; and augmenting the development role of the regulator. They also suggested that the constitution of the authority may be broad based to take care of the interests of all stake-holders. There was a request from consumer associations that the brokers and agents also are brought into the regulation network. There were further requests for reduction in the upper limit of the area from current 4000 sq m or specify the number of minimum units being constructed beyond which registration becomes essential. Inclusion of force majeure provisions were also sought by the developers.
RICS has welcomed the efforts of the ministry in discussing viewpoints and being receptive to feedback from all stakeholders, to ensure an effective law is made for this important sector. It highlighted that a majority of buying and selling in real estate is through brokers and keeping the brokers out of the purview would leave out a large part of the market unregulated. Given this fact, a broad consensus emerged for brokers to be considered as part of the regulatory framework, RICS said.
RICS further suggested that ‘to avoid registration with the envisaged regulatory authority becoming another step in the approval process, a process of deemed approval on the lines of income tax returns should be considered. This would mean that developers get registered when they file all required documents and approvals with the regulatory authority and the authority has the power to question and penalize any project that is found to be incompliant’.
There was unanimous consensus that the sanctioning of approvals process had to be streamlined and that all stakeholders including the government agencies should be brought under the purview of this bill.
RICS raised the point that any regulatory framework should have underlying codes of practice and standards for any form of regulation or consumer redress to function efficiently and recommended that the central advisory council should perform the role of setting such standards. This suggestion was taken positively and if implemented, will lead to the sector becoming more transparent and professional.
While the state regulatory bodies will have a dispute resolution process, the exact nature of the consumer redressal process has not been determined yet and possibly this is an area that requires more deliberation, RICS added.