Right time for realty regulator

With real estate prices shooting to record highs and quality of construction not keeping up....

With real estate prices shooting to record highs and quality of construction not keeping up, experts say the time is ripe for a regulator to oversee the sector and protect consumers from unscrupulous builders.

8216;8216;Most countries have real estate sector regulators. The time has come for India to follow suit,8217;8217; says Padmanabh Vora, executive director of Deloitte Touche Tohmatsu. The regulator, on the lines of Sebi or Trai, should oversee quality control.

Citing an example, Vora says builders in Singapore have to offer a prospectus to their potential customers and keep the bookings amount for every project in an escrow account. 8216;8216;However, in India, builders not only charge a hefty premium but project proceeds are often siphoned off,8217;8217; says the former Chairman of IDBI.

However, experts say it is very difficult to impose price controls on the industry considering that both buyer and sellers agree to the deal just like the stock markets. 8216;8216;Other aspects like quality controls can be looked after by the regulator,8221; says an executive with a MNC property consultant. Singapore8217;s Building and Construction Authority8217;s main objective is to improve construction quality and raise professionalism of firms and personnel in the real estate industry. It also looks after building safety, administers a progressive regulatory framework. Besides, the real estate regulator not only issues license to the brokers and builders but sees to it that the projects are completed on time and no extra charges are levied on customers.

As of now, none of Indian states or the Union government has a body which regulates the Rs 61,600-crore industry. Though the urban development ministry has policy-making roles, it has no regulatory powers. Due to this lacunae, builders are having a free run.

With the industry8217;s size growing to 104 billion in another 10 years and foreign direct investment now allowed, industry seeks urgent reforms, including scrapping the Urban Land Ceiling Act which is creating an artificial shortage.

Real estate developer Niranjan Hiranandani argues for less control as the country needs to increase supply to bring prices down. 8216;8216;The industry is already over-regulated with over 50 permission required for a construction,8217;8217; says he. 8216;8216;What the government needs to do is scrap laws like Urban Land Ceiling Act which encourages slums,8217;8217; says he.

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Builders are also alleged to be hoarding properties, adding to the current price rise. In Mumbai alone, in the last one year, prices have shot up by almost 50-80 per cent due to an acute shortage of supply.