Building trust has been one of the most of difficult challenges for India’s real estate industry to surmount. Hiding in the haze of a massive construction boom are grumbling voices of millions of consumers about opaqueness in transactions and incomplete project disclosures. Developers often sell flats on the basis of super built area — includes common passage area and stairs — that is 20-30% more than the actual flat. It is only fair that the builders divulge the details of the plans about the design, structure, layout, time of completion and other project specifications well in advance. The right of choice, depending on individual requirements, should lie with the buyer. It is only fair that the disclosure by the promoter of the number of apartments for sale has to be based on carpet area, and carpet area has been defined. The buyer should know what he is actually getting and paying for. This standardisation is absolutely critical to reduce the asymmetry prevailing in real estate transactions.
The Real Estate (Regulation and Development) Bill seeks to do precisely that. The bill makes it mandatory for builders developing a project exceeding 1,000 square metres to register with the proposed real estate regulatory authority (RERA) before launching or even advertising a housing scheme. One of the provisions of the Bill is the mandatory registration of real estate agents with clear responsibilities and functions. The punitive provisions include de-registration of projects. If the builder defaults on promises made at the time of the launch, the buyer can approach consumer forums if there are disputes with real estate developers. This is a major departure from the present where tales abound of harried and hapless home buyers who often find themselves at the mercy of builders. Time overrun in housing projects is almost taken as a given currently.
As a 2012 government white paper pointed out, to reduce the element of black money in transactions relating to immovable property, robust provisions should be introduced in the income tax law with safeguards to reduce administrative complications and increased ease of compliance. The real estate sector in India contributes about 11% of gross domestic product (GDP). But it also leads pervasive tax evasion. About a third of India’s black money deals are believed to be in the real estate sector. A national real estate regulator with appropriate powers is an idea whose time was long overdue.