Real Estate Bill may be less than perfect, but at least a start

When the Union Cabinet approved watered down version of real estate regulatory bill, it was tabled by a panel. According to Tanuj Shori, the view of Square Yards has been in favour of a strong real estate regulator, in line with global standards. He added that it is a question of “when” rather than “If” India would be in compliance to global best practices. In order to explain his point further, he gave the example of Singapore, where every project needs to go through multiple level of due diligence checks prior to its launch. Additionally, the real estate regulatory authority also purviews and keeps in check the marketing and communication of the developers. This in turn will protect potential buyers against any miscommunication. Likewise in Dubai, developers cannot withdraw funds from project escrow account unless pre-stipulated construction targets are met. In fact, as far as global markets such as USA, Canada, Australia, etc. are concerned, similar strong regulators are implemented.

Square Yards believes any small step is a step in the right direction. Though following a long waiting period, the cabinet has put forwards its views and cleared the bill to be tabled in the budget session, however, the cabinet did taper down many strong recommendations which include, not checking antecedents of promoters, limited diligence on track record, and most importantly, no blacklisting in case of 2 prior defaults.

Besides, the bill is also expected to include major provisions for regulation of real estate agents. At a global level, real estate agents are supposed to deploy resources for due diligence on projects they intend to market, necessary certifications and training programs, and fiduciary responsibility towards safeguarding the consumer’s interests. Although for the time being, the cabinet has kept secondary market transactions and agents beyond the purview of the bill, but the agent market in India should be consolidated considerably owing to the inclusion of primary projects. The regulated players should ideally be equipped enough to better train, monitor, and regulate their agents from misselling on new launches. This should invariably bring back some quantum of trust back into Indian realty sector, and the role of middle men in it. Shori also concludes that for the interests of the consumer, a smooth passage of bill and more amendments in the near future are awaited.