Finally, Some Regulation

Finally, Some Regulation
Krishna Kumar Mangalam
The Times of India (Delhi edition)

The central government is working on a model real estate regulation bill to provide guidelines to facilitate growth and promotion of healthy and transparent, efficient and competitive real estate sector in the country, said the housing and urban poverty alleviation minister Kumari Selja. This is a welcome move and will help the sector in becoming efficient and competitive. However, developers feel the government should form a separate regulator on the lines of Securities and Exchange Board of India (SEBI) to regulate the sector.

Addressing a conference on real estate, the minister said Indian real estate market is unorganized and fragmented and that most of property transactions are based on certain perceptions and not necessarily on sound business principles. In this, customer satisfaction is low and the procedure for redressal is long and cumbersome.

This has created problems for both buyers and developers. As end users are not sure of delivery of a house by builders on time, they don’t want to risk a purchase by taking a loan from the bank. Particularly, in times of a slowdown when developers are facing a financial crunch, the likelihood of developers not completing projects on time is high. In fact, in the last couple of years, many reputed builders have not been able to deliver their projects on time. Some of the projects, in fact, were delayed by more than two years.

Apart from this, many buyers are not even sure of the specifications, which developers promise while selling them the houses/flats. Worse still, when developers do not deliver on time or stick to the promised specifications while selling, buyers do not know where to for redressal. Going to a court is not only time consuming but also expensive.

This has forced buyers to either defer their purchase or to go for completed projects. But, this apprehension of end users has affected genuine developers as well, which have a plan and required finances to complete a project. However, in the last couple of months, end users have started showing interest in buying new projects. But, they want to buy in the projects of reputed developers alone. This has created problem for the new but good developers.

To increase the stock for affordable housing the focus has to be on augmenting land supplies. Kumari Selja said the issue is a critical one and requires a number of measures such as alternative methods of land assembly, development and disposal to be pursued, check on prices of urban land, encouraging public-private partnership, promoting intense use of land-higher densities, revision in Floor Area Ratio or Floor Space Index and change of norms to suit local situations, discouraging speculation in land development, and allotment or disposal process to check rising prices of land.