S Anand,a resident of south Delhi,bought a flat in Greater Noida in 2006. Even after paying 95 per cent of the cost of the apartment he has not received possession,which was due in April 2008. In addition,the developer has taken advance maintenance charges for two years,even though the contract cited that only one years charge was to be levied.
Vijay Kumar,a resident of Rohini,invested Rs 60 lakh for 1,000 sq ft in an IT Park at Manesar in Gurgaon which was yet to be developed. Later,Kumar learnt that the developer was not entitled to sell or lease space to individuals. It was only supposed to develop the space and rent it to IT companies,according to the terms under which land was allotted by Haryana State Industrial and Infrastructure Development Corporation. The cash-starved group sold space,illegally as it later turned out,because it needed to raise money for the project. The group has amassed several thousand crores from investors with the promise of handing over developed space in three years. Though the deadline has passed,buyers have not been allotted space. The group is also refusing to refund buyers money,saying that investors might re-invest it in the groups other upcoming projects.
Anand and Kumars cases are only the tip of the iceberg in a sector where regard for customers is scant. In the absence of a regulatory authority,such malpractices go unchecked.
Contrast this with the financial sector. If you want to buy an insurance policy,only an insurance agent who has undergone training and been certified by the Insurance Regulatory Development Authority can sell it to you. Similarly,intermediaries in the share market and mutual fund industry have to abide by Sebi guidelines. However,no equivalent body exists in a sector where people make the most significant investment of their life a house.
WHY WE NEED IT
A number of stakeholders feel a regulatory body would bring greater accountability to a sector that sorely lacks it. Sanjay Verma,executive director,Cushman & Wakefield says: Given its size,direct and indirect contribution to GDP,and potential for job creation,its vital that the realty industry gets a federal regulatory body. He adds that care has to be taken to ensure that the main responsibilities include providing guidance on policy framework,resolution of stakeholders concerns,and consumer rights protection.
Advantages of a regulatory body are many. Sachin Sandhir,MD & country head,Royal Institution of Chartered Surveyors,India,says,The regulator would monitor the implementation of projects. This would minimise the gap between what is promised and what is delivered. Introducing licensing of developers would also eliminate fly-by-night operators. As disclosure standards improve,developers would not be able to indulge in practices such as diversion of funds from one project to another. Regulation of the profession of property valuation would ensure that valuations are based on a set of uniform standards. This would address the issue of prices rising to unaffordable levels because of poor valuation practices. According to him,all this would instil greater confidence among customers and investors.
Mittal says that the regulator would issue and renew licences. It will also rate developers,architects,contractors and real-estate …continued »