On Tuesday, when the Real Estate Regulatory Bill was passed, the real estate sector of India experienced a major storm. It brought multiple rules and regulations that will be effective in protecting home buyers’ interests, improving transparency and accountability and institutionalize the sector. But if we go to the other side of it, the bill will make developers business trickier. Making it mandatory to attain the clearances before digging the soil or even advertising will delay the projects even more and can cause artificial shortage leading to increase in prices.Many developers have expressed opposition, claiming that there is no need of any better mechanism and the sector will function easily if it is self regulated.However the major clauses that will hit builders are:
- The launch of project is allowed only after obtaining necessary clearances.
- Pre-launch sales only after getting regulatory approvals.
- If only the builder’s website showcases the details of projects and receipts of clearances, the construction can be started.
- The authorities will be furnishing the approval or rejection in 15 days.
- Dedicated bank account for every project.
- Buyers can claim refund with interest in case of delays.
- Developers must keep 70% of buyers’ funds in a separate account for escaping any delays.
- Not more that 10% advance should be taken from a buyer without written agreement.
- Photographs of site must be use for advertisement.
- Offending repeatedly might land developer in jail.
Tricky points against the bill:
- Slowdown is inevitable in launches of new projects.
- Stashing buyers’ funds in separate accounts might affect the cash flows.
- Increased cost due to delay in arrival of projects, ultimately to be passed on to consumers.