Realty experts say that while the passage of Real Estate (Regulation and Development) Bill, 2015 is a game changer, the government should also bring about administrative reforms to speed up approval processes to avoid project completion delays.
“In most states, real estate developers are required to get 40-70 approvals before starting a project.Currently, realtors have to seek approvals from NHAI, the pollution department, ministry of environment, Airports Authority of India, and Directorate General of Civil Aviation . They also have to get plinth certificates after completion of each floor, occupancy certificates and obtain non-agricultural land clearance for land that is already under the city development plan,” says Amit Modi, Director, ABA Corp and vice president Credai Western UP.
The passing of the bill will give homebuyers the confidence to return to the market. The bill will make real estate more transparent and organised and responsible builders will prosper. “We hope the government will also bring external development charges paid to local authorities under the scope of the regulator to ensure timely delivery of infrastructure that has been paid for by homebuyers. A more formal and regulated industry should in time also benefit from improved access to capital markets,” says David Walker, managing director, SARE Homes.
Credai, the umbrella body of real estate developers across the country, says that bringing ongoing projects under the legislation would mean stopping work and ensuring compliance of ongoing projects with the new legislation.
“This will not only be time consuming but will pose insurmountable difficulties in determining the nature and scope of regulation for ongoing projects. If a project has already been sold to the extent of 50% and construction is underway, it is practically impossible to make 50% of the project compliant with the Act. On the other hand, making the project fully compliant would be absurdly inconvenient and prohibitively expensive,” it says.
Urban Development Minister M Venkaiah Naidu said the bill aims to protect the interests of buyers and bring more trans parency in the sector. “It brings in only a regulation and not strangulation.This Bill is not against anyone...it will renew investors’ confidence and ensure timely completion of projects and create more opportunities. In this way, it will help in achieving the target of ‘Housing For All’,” he said.
It is said to be a major reform measure to regulate the vast real estate sectorand bring order to it. The Bill also provides for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for any violation of orders of Appellate Tribunals or monetary penalties or both. It proposes a minimum of 70%collections from buyers should be deposited in separate escrow account.