Regulator far from Realty

 A few months later,Paul noticed that the developer has hiked the transfer charges amount paid to the developer for transferring the title of the flat in someone elses name 8212; by more than 100 per cent. Even though I managed to deposit the said amount in time,the developer asked for some additional formalities which delayed the entire process. I had to shell out Rs 4 lakh as a result,instead of Rs 40,000 earlier, says Paul. Later,he re-read the sales deed and found no mention of hiking of transfer charges. I feel cheated and blackmailed, he says.

 Such a feeling is not entirely uncommon among various buyers. Using web as a tool,many of the aggrieved buyers have joined hands to raise their voice against countrys leading developers and listed firms like DLF and Parsvnath. One such buyer,who mobilised others against K P Singh-promoted realty giant DLF,for one their projects,says collective voice and using web as a tool helped. My issues with the developer have now been sorted, said the buyer,requesting anonymity.

 But Paul has had no such luck. Like most others,he has fallen prey to developers unscrupulous arm-twisting measures to elicit his pound of flesh. It is under these circumstances,that one looks forward to the proposed real estate regulator,says Paul. At least we would know who to approach if confronted with such a situation, he says.

 One such effort which promised to provide some light at the end of a tunnel and protect consumers interest is the Model Real Estate Regulator Bill,drafted by the Kumari Selja-led Housing and Urban Poverty Alleviation ministry last year. The bill came on the back of a legislation passed by the Haryana government to curb malpractices in the buoyant realty sector. The bill aimed at strengthening the hands of the consumers and bringing to book errant developers.

 But the government has now decided to prepare a second draft of the bill after labouring painstakingly on the first one for over ten months. The second draft will be placed before a wider group of states,developers and experts in another round of consultations before being finalised, the ministry said in a statement. It will organise workshops and hold consultations with various state governments and include their inputs while coming up with the second draft.

 The consumer activists have their reservations on the re-drafting of the bill,fearing that some of the stringent provisions may be diluted in the process to shield developers. Given the immense pressure of the developers lobby,some of the provisions in the draft bill may be diluted. What is to be seen is that how much of it is diluted, says Sriram Khanna,senior vice president,VOICE,a consumers protection initiative.

 Even though urban development experts believe that checks in this sector are much required,they also question the effectiveness of the proposed legislation. The proposed legislation is just a model Bill,which has to be enacted by the states. It is actually the states which need to have the requisite will to bring in the legislation, the expert said. Experts also point out that various provisions exist under law which safeguard consumers interest.

The bill proposed the setting up of a real estate regulator that was to act as the big boss,penalising errant developers,slapping fines,pronouncing three years imprisonment,if found guilty. The information,according to the bill,will be maintained on the regulators website,which will also mention the names of blacklisted developers to warn potential buyers. 

 Some of the salient features of the bill included that for any housing project,exceeding 1,000 square metres or four apartments,the builder will have to procure a registration certificate from the regulator after furnishing all the relevant project details and permissions from competent authorities. This includes the number and size of plots,layout plan,carpet area and plinth area of the flats or apartments and the facilities provided.

 Safeguarding the interest of buyers,the regulator makes it mandatory for the developer to enter into a sales agreement ahead of taking deposit amount from a potential buyer and stand in warranty for the project for two years after handing over the possession for any construction related troubles. Any buyer wishing to quit the project on account of any delays or false promises shall be returned the entire investment at prevalent rate of interest. A project can not be marketed or advertised without the registration certificate.

 Some of these provisions have been questioned by the industry bodies and developers. Federation of Indian Chambers of Commerce and Industry Ficci says that registration with the regulatory authority amounts to licensing,which is a regressive measure. Further,seeking approval from the authority prior to start of a project would lead to duplication of efforts,Ficci says.

 The bill stipulates that the builder or promoter of the project will have to submit a timeline by when various civic services like supply of electricity and water,sewerage and drainage systems,lifts,fire-fighting equipment will be made available. The cost escalation of the project,if any,will have to be arrived at by mutual consent between promoter and buyer. The names and addresses of all middlemen or brokers will have to be maintained on the website.

 In case,the developer fails to provide any of the services listed at the time of purchase,he will be asked to compensate the buyer. The builder shall furnish a bank guarantee equal to five percent of the estimated cost of the development works to a competent authority,which may discharge it on recommendation of the regulator. This provision hasnt gone down well with the industry bodies,which say that it will unnecessarily escalate the cost of the project,the incidence of which will have to be borne by the buyer.

 This view is also shared by the National Real Estate Development Council NAREDCO,a representative body of real estate developers. There are certain provisions proposed which may defeat the very purpose for which the act has been proposed. The proposed act in its present form will add costs and delays to the lifecycle of the project. In our opinion simplifying the approval procedures,facilitation,regulation,control and growth of real estate development and safeguarding interest of all stake holders should be its objectives, said NAREDCO president and Omaxe CMD Rohtas Goel.  

 According to the bill,the promoter will have to obtain an insurance policy,for at least five years after construction activity is complete,for apartments,against loss or damage by natural calamities,for the cost of replacement of such property and loss of life and bodily injuries suffered by persons occupying apartments. This provision too,has been contested by industry body. The burden of premium on allottee may turn out to be unbearable. It may also be difficult to estimate the value of insurance in case of loss of life. The insurance of the project by promoter should cover only the period till the project is handed over to the maintenance agency and should exclude the risk to life of individuals visiting or occupying the building,which could be left to allottee or occupants, says Ficci.

 The central government which had drafted the Real Estate Regulator Bill five years ago to regulate the sector in the capital Delhi,has been dithering in even introducing it in the Parliament. Urban development ministry officials insist that the draft bill is ready and some issues like registration or licensing of developers are being debated.  

 Even as the two central government ministries battle it out amongst themselves on who brings in the regulation first,consumers await some regulation which will provide a relief to their realty woes.

smita.aggarwalexpressindia.com