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Builders wary of Bill to regulate realty industry

Real estate developers are jittery ahead of the introduction of the draft of a bill to regulator the sector in the coming Parliament session. While the draft has been circulated to elicit views from various stakeholders, its exact shape is not clear.

business Updated: Sep 29, 2009 21:09 IST
HT Correspondent

Real estate developers are jittery ahead of the introduction of the draft of a bill to regulator the sector in the coming Parliament session. While the draft has been circulated to elicit views from various stakeholders, its exact shape is not clear.

The draft envisages an industry regulator with powers to administer projects, protect buyers interest and punish developers not adhering to regulation, but it is facing criticism.

While the bill talks strongly of the processes that a developer needs to undergo before even launching a project and to safeguard the interest of buyers, the National Real Estate Development Council (Naredco), an industry association, feels that timely completion of housing projects is not the sole responsibility of the developers.

"All stakeholders like brokers, contractors, architects should be made accountable and not just the developer," said R.R. Singh, director-general, Naredco, told Hindustan Times.

The builders do not seem receptive to the bill in its current form. "We cannot accept it in its current form and will talk to the government," said Rohtas Goel, chairman of Delhi-based uilder Omaxe Ltd. "It would be unfair to treat a civil offence as a criminal which the bill talks of."

Builders insist that getting government approvals is a time-consuming process and needs to be simplified. The draft bill seems to have taken that into account.

The Model Real Estate (Regulation and Development) Act – as the draft is called – seeks “to establish a framework of standard procedures and norms for speedy processing and grant of permissions, building approvals and licences.” This would be done in consultation with the state government or the competent authority, it says.

Despite the reservations from builders, industry experts see the planned law as a welcome change for the Indian real estate industry, which is widely perceived to be disorganised. The law is expected to drive growth by smoothening procedures and introducing higher accountability.

“Currently, only listed real estate companies are accountable for ways in which they conduct their business and it is not true for smaller players. Such an agency would make unlisted companies equally accountable,” said Ashutosh Limaye, associate director —strategic consulting, Jones Lang LaSalle Meghraj. “If this authority performs the intended functions efficiently, it can do much to induce confidence in foreign real estate players intending to invest in India”.