Real Estate Bill Leaves Little Room For Manoeuvre; Developers Uneasy

The long-awaited Real Estate Bill, 2016, has brought cheers to home buyers but is a major shake-up for the real estate sector. The Bill, which is expected to make the real estate sector more regulated and transparent from the buyer's point of view, still has some room for improvement.

As the Bill remains silent on many crucial aspects of home-buying and delivery, this has made developers sceptical, as the government chose to ignore the demands of the industry.

Key points

• Real Estate sector is still not recognised as an industry: This demand from the real estate sector has been a long overdue. As the real estate sector does not have an industry status, it is unable to instil the required corporate culture and industry discipline. The players are unable to attract government subsidies even when they are undertaking projects in backward or remote areas. The grant of an industry status will help solve many problems affecting the real estate sector.
• Infrastructure status to housing sector still a distant dream: The real estate sector should ideally be part of the infrastructure sector as it provides housing to people. It contributes towards developing multi-storeyed buildings, social facilities like parks, gymnasiums and townships which are no less than cities. If the real estate sector is granted the infrastructure status, it will make housing more affordable as developers will be able to access funds at a lower rate of interest. 
• Single-window clearance demand unmet: The most common reason behind project delays is believed to be red-tapeism. Inordinate bureaucratic processes to get the required approvals from multiple authorities often delay projects. A single-window clearance system is the way forward to help developers adhere to the expected timelines. 
• No clarity on projects less than 500 sq m and past projects: The registration requirements apply only to projects that are either over 500 sq m in size or have more than eight units. Therefore, buyers investing in low-budget projects will still face most of the difficulties that this Bill seeks to address. The people who should have been accorded the utmost protection are being left out under the new law. There is also a grey area with respect to past projects. Though the Bill has been made applicable retrospectively, there is an ambiguity regarding its applicability on under-construction projects or projects nearing completion. 
• Fear of over-regulation: The Bill may delay new project launches as developers are apprehensive about the increased registration and other procedural formalities. The process shouldn't be allowed to become cumbersome, and bureaucratic interference has to be minimal. The penalties and punitive measures have also fuelled a fear in the sector. Besides, the rules pertaining to the level of disclosures required is yet to be framed. Is the developer required to provide only the details of the project or that of his company or his personal details as well? What about the projects that are being executed through special-purpose vehicles? 

Thus, some clarity on the Real Estate Bill, 2016, is needed for a smooth transition and effective implementation of the law in every state of the country. The law has the potential to bring India's real estate market on a par with other more-evolved global markets.