The Cabinet recently approved the real estate regulation and development bill which provides for putting in place a regulator for the housing sector in the country with a view to bringing transparency to the sector.
The regulator will oversee the functioning of the sector which unfortunately has been most opaque in its dealings. The bill, aimed at regulating the sector which is beset with multiple problems, is therefore a welcome step which has been long overdue.
The bill provides that the builder whose project is coming up on an area of 1000 Sq. metres or more will have to register with the regulator. The Agents, commonly known as property dealers, too will have to register themselves with the regulator and make public all the relevant information.
The prospective house owners in the country have been facing lots of problems in the process of acquiring a dwelling unit. They are never told the status of the project advertised with regard to the mandatory clearances from different agencies. Projects are launched without obtaining such clearances leading to litigations and harassment for the consumer.
There are also cost overruns and often inordinate delays in handing over the dwelling units to the consumers. Besides, there are hidden costs which the consumer comes to know only at the time of taking over the possession. Not the least important is the confusion sought to be created by the builders with regard to the unit area. Instead of mentioning the carpet area--the actual area of a dwelling unit which one uses-- the builders sell the vague super area which includes all the common areas.
To deal with such problems the bill provides for a number of measures. For instance no project can be launched, in fact even publicized, before all the necessary clearances for the project are obtained. Any violation of this provision through a misleading advertisement will lead to imposition of a penalty on the builder and if the offence is repeated for the second time, a jail term up to 3 years. The builder will have to put on his website all the relevant details about this.
Similarly, in case of inordinate delay in handing over the possession as per the agreement, the builder will have to make full refund of the money to the consumer along with interest. The bill makes it mandatory for the builder to sell the unit according to the carpet area and not the super area as is being done now.
To prevent builders from diverting funds collected for one project to other projects the bill provides that 70 percent of the funds raised for a particular project have to be put in a different account and used for the construction of that project only. All this, indeed is going to bring transparency, accountability and professionalism to the sector which will enhance its credibility and bring some relief to the house buyers. But the question is whether this will be enough to deal with the massive housing problem the country is facing?
Two things need to be given immediate attention if the bill has to serve the desired purpose. First, since the clearances have to be given by various government agencies, it is important that they too are brought under its purview. Second, the regulator is proposed to be only for the housing sector. The commercial sector has been left out for the time being. One hopes that this sector too will be brought under the purview of the bill sooner than later.
Alongside, steps need to be taken to reform the sector to meet the massive housing demand in the county. The land use provisions and Floor Space Index (FSI), need to be given a fresh look. Better land use is the need of the hour in view of the huge shortfall in the housing field. Single window system needs to be given a push to avoid delays.
Growing urbanization, a growing middle class and migratory population is putting additional burden on the demand for housing in the country. It is therefore imperative that in addition to regulating the sector the supply side is also strengthened.
Housing is one sector which gives a push to many other sectors like steel and iron, cement etc. It also generates employment at various levels. It thus plays a major role in the economic development, particularly at a time when the economy is facing a slowdown.
The bill envisages a well structured grievance disposal system. There will be an Appellate Tribunal to adjudicate disputes which will be headed by a sitting or a retired judge. There will also be a National Advisory Council headed by the Housing minister to advise the regulator on crucial matters. That should take care of adopting a fair approach with regard to all stakeholders involved in the sector.
Since land and property is a state subject, cooperation from the state governments is of utmost importance to make the bill a success. One hopes this cooperation will be forthcoming in the desired measure, as it is as much in the interests of the states to regulate the housing sector as it is for the Central government.
