REAL ESTATE BILL - A MIXED BAG
The Real Estate (Regulation and Development) Bill, approved by the Union Cabinet recently, has been met with mixed reactions, but is expected to provide transparency and ensure developers to not delay projects or divert funds to other projects.
The original has been ‘watered’ down (to reduce the effectiveness or force of something). Earlier, developers had to set aside 70 percent of the money mobilized from buyers during pre-sale of homes and deposit it, in an escrow (temporary) account. It has now been reduced to 50 percent.
The President of Confederation of Real Estate Developers’ Association of India, says certain provisions in the Bill that will hamper affordability have not been amended.Moreover, he told that the discretionary use of some provisions will severely affect the development activity.Developers also feel that the Bill has done nothing to simply the procedures for obtaining plan sanction/approvals. However, there are some positive points in the Bill, say like Creation of a State Level Regulatory Authority which will help the home buyers. It is opined that , if this Regulatory Authority engages proactively with stake holders in the housing sector, it will be a boon, primarily for the investors.
New Realty Bill may speed-up stuck Projects
With the Government bringing in ongoing projects under the territory of proposed Real Estate Law,the Developers are looking to speed-up construction of existing housing units to escape any regulatory action, but funds may be a constraint.Real Estate market, has been facing a huge delay of six to seven years in project completions, which in turn has affected the buyers’ interest.
With the Approval of Real Estate Bill, the Government brought all the ongoing projects into its fold, which would need to be registered with the proposed Regulator after the new law comes into effect.
The CREDAI, the apex body for Real Estate Developers, opposed the decision to bring the ongoing projects under the proposed Law, saying that the provisions should be prospective and not retrospective.The bottom line is that the retrospective effect of the bill would definitely cause delay in ongoing projects if they get entangled in the regulatory process.
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