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Indian Real Estate News : Delhi NCR
Developers upset with real estate legislation
Source: Business Standard Nov 12, 2011
The proposed real estate regulation legislation is out in the public domain, but has already drawn sharp criticism from developers. The draft says a promoter may face up to three years in jail or a fine up to a tenth of the estiated project cost for the offences mentioned under various sections.

A clause on mandatory registration of projects and for issuance of licences was opposed by Credai (Confederation of Real Estate Developers Association of India). "Getting licences involves a human element, that will breed grounds of corruption," said Lalit Kumar Jain, chairman of Credai. He said this would add another layer to the innumerable sanctions and approvals.

“This apprehension of another layer to the maze of clearances already required is absolutely correct," said Anurag Mathur, managing director, Cushman and Wakefield, India. However, the regulator may gradually dismantle some of the approvals at the Centre or state level, he added. Given that land is a state subject, with every state having its own laws, "the Bill will bring uniformity in the real estate sector through the country", he said. He said the major plus point was the consumer redressal mechanism.

On the penalty, Jain said the bill would create a 'terror-like' situation in the industry, "The Bill would prevent people from joining the industry due to fear of harassment and tarnishing of image," he said. This is against the objective of a regulatory bill, he adds.

Rajiv Sahni, partner-real estate practice, Ernst & Young, agreed. “Some provisions like cancellation of registration of developers and punishment for developers for various offences need to be more sharply defined, so that it does not act as impediment to running a genuine business,” he said.

The Bill is expected to be introduced in Parliament in the coming session. Jain said the industry would seek a meeting with housing minister Selja Kumari over many of the clauses. Earlier this week, she had said that in case any changes were required, "We will discuss that, in the interest of the sector”.

According to Sachin Sandhir, managing director (India), Royal Institute of Chartered Surveyors, the current version of the bill is no longer one of a model bill prepared by the central government for the states. "With the format having undergone a change, the bill is now applicable to the entire country and leaves it to the state governments to establish a real estate regulatory authority and other rules and procedures in due course," he said.

Sahni called the bill a consumer delight. "The bill's key tenets of setting up an authority and compulsory registration are confidence building measures, which will help attract a larger audience for the developer." According to him, information on saleable area, list of approvals, and time schedule for completion, all clauses, would help buyers take an informed decision.

There hasn't been a significant change in the other controversial provisions, including the minimum five per cent bank guarantee, registration of projects with the authority, developers' obligations towards consumers and the various functions the regulator must perform.
Tag: India real estate, CREDAI, Real Estate regulation act
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