Monday, 13 April 2015

Proposed real estate law may force developers to speed up stuck projects

With the government bringing in ongoing projects under the ambit of proposed real estate law, 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, particularly Delhi-NCR, has been facing a huge delay of 6-7 years in project completions, which in turn has affected the buyers' interest also.

The Union Cabinet last week approved amendments to the long-pending real estate bill to bring under its ambit all ongoing projects, which would need to be registered with a proposed regulator after the new law comes into force.

CREDAI, the apex body for real estate developers, has opposed the decision to bring the ongoing projects under the proposed law, saying that provisions should be prospective and not retrospective.

"If given a choice developers would like to push ongoing projects so that the they do not get stuck in the registration process of the regulatory department. One must understand that to compress the delivery time, adequate fund would be required, besides robust technology," CREDAI (National) President Getamber Anand told PTI.

"The bottom line is that retrospective effect of the bill would definitely cause delay in ongoing projects if they get entangled in the regulatory process," he added.

Property consultant JLL India Chairman and Country Head Anuj Puri said that it would be difficult to bring ongoing projects under the purview of the new law.

"If it does, there will be a rush to secure completion certificates, wherever developers are in a position to do so, before the implementation of the Act," he added.

Puri, however, said consumers would be benefited if the construction activities of those projects, which are nearing completion, speed up because of this provision.

"Overall, the real estate regulation is a good move to bring in more transparency and corporate governance in the real estate sector. This will no doubt protect consumers and also weed away with unscrupulous developers," he said.

The amended bill, which is likely to be introduced soon in Parliament, also seeks to make it mandatory for all developers to keep minimum 50 per cent of funds collected from buyers in a escrow account to meet construction cost.

The Real Estate (Regulation and Development) Bill aims to protect the interest of consumers, promote fair play in real estate transactions and ensure timely execution of projects.

The Bill contains provisions of registration of realty projects and real estate agents with the proposed Real Estate Regulatory Authority.

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