Fearing that the new Real Estate (Regulation and Development) Bill cleared a couple of days ago by the Centre will add to the red tape in the real estate sector, senior members of the Confederation of Real Estate Developers’ Associations of India (CREDAI) expressed concern over various aspects of the bill at an exhibition held in Ahmedabad, Friday.
“A new sword by the name real estate regulatory act is hanging over our heads. As an industry body we welcome the presence of a regulator, because it will ensure that people who are serious about the business will remain. But we are not too happy about some of the contents of the Bill,” said Getamber Anand, president, CREDAI National (Noida) while addressing the CREDAI Gujcon Convention & building material Expo 2015 which was attended by Gujarat Chief Minister Anandiben Patel.
Under the new Bill, real estate regulatory bodies will be formed in all state capitals. These regulators like those present in state pollution control boards might end up being political appointees and add to the existing red-tape, real estate developers said.
“The on-going projects should be kept outside the purview of the real estate regulator as and when he/she is appointed. To ask an on-going project to get registered with the regulator will mean hunting for old documents and certificates. This will hold up projects,” he said adding that the Bill should not be retrospective in nature.
“There is one more serious issue. The clause dealing with the cancellation of registration of the real estate projects can be misused. People who wish to target builders and their projects, might use this clause to file false complaints against builders,” Anand added.
According to Irfan Razack, chairman CREDAI National (Bengaluru), the Bill in its present form will create a number of hurdles for small builders. “It will definitely slow down things and will create one more window where builders have to approach,” said Razack who said the developers on an average spend 6-9 months in getting clearances for a single project. This period, according to him is as high as 9-12 months in a city like Bengaluru and two years in Mumbai.
“We hope it does not become a stumbling block… Secondly, Builders have been asked to deposit at least 70 percent of the sale proceeds, including the cost of the land into an escrow account to meet the construction cost. If such a huge amount is kept aside by the builders, then their liquidity will decrease, dependency on bank borrowings will increase, which will lead to higher interest costs and this cost will have to be passed on the home buyer. So more thought should go into this aspect as well,” he added.
The representatives from the real estate body were also against bringing commercial real estate in the ambit of the regulator and the high penal provisions that exists in the Bill in its current form.
Meanwhile, builders in Gujarat used this forum to highlight the issues faced by them. Veljibhai Sheta, chairman of CREDAI Gujarat asked the chief minister to make quantum of paid FSI (Floor Space Index) common for all cities in the state. He also pointed out a number of other issues, including the triple premiums that builders end up paying in land dealings. Others like Sharif Memon, president CREDAI Gujarat also talked about the need for updating the state’s zoning policy and extending mass transportation to cover newer areas of cities.