Cabinet’s decision on the Real Estate Regulatory Bill has attracted mixed reaction from the industry, consultants, bankers and buyers. Developers feel the proposed bill is biased in favour of buyers. “Even though progressive developers and trade chambers have welcomed it, the Bill appears to be a tad harsh for realtors” said Naushad Panjwani- Senior Executive Director, Knight Frank India. “The Bill being buyer centric won’t be accepted in totality by the real estate developers”, feels Ganesh Vasudevan, CEO, IndiaProperty.com. According to him there is lot of work that needs to be done before the Indian realty sector gets streamlined and regularized. “The Bill should be more balanced and should include clauses that protect developers as well”, opines Brotin Banerjee, MD & CEO, Tata Housing.
Realtors fear that the proposed Bill would create additional layer of authority in an industry where there already exists plethora of authorities. This may only delay the process of getting approval for the new project. “(Government) should ensure setting up of a Single Window Clearance mechanism to avoid unnecessary delays” says Brotin Banerjee. Panjwani is also of the same opinion who said “Have we missed an opportunity to club all regulating authorities and have a single window clearance?”
Fears are raised about certain other provisions too. For example, it is proposed that projects could be launched only after obtaining all approvals from various authorities and after passing all construction plans. This may further prolong the project execution period as the biggest reason for delays in any project is in getting the plans approved
Also the provision which provides for builder depositing up to 70 per cent of buyers’ payments into an escrow account, and that the money may be used only for the project may affect the realtors’ liquidity. In case where land price is high it may create cash flow problems to the developer.
However there is unanimity in that the proposed Bill will bring transparency in the sector which in the long run will help the sector to raise money for investment. “Banks will now have much more confidence in lending to this sector”, feels Brijesh Parnami, CEO-Distribution at Destimoney Enterprises Private Limited. This may also help in providing ‘Industry status’ for the sector – a long awaited demand of stakeholders involved in real estate.
Once the Bill gets nod of the Parliament becomes an Act, it may have some impact on the real estate prices as the supply of new stocks may be slowed down. “In the short to medium term, after the Bill is enforced, we may see a noticeable slowdown in launches of new projects, as getting all the necessary permissions in place is a long and tedious process, which may delay the entire process of launching a project” says Sanjay Dutt, Executive, Managing Director, South Asia, Cushman & Wakefield. He also feels that the Bill might create an upward pressure on prices as there will also be some cost implications as developers wait to launch their projects with due approvals in place. But some sacrifice has to come all the sides, if bringing transparency into the sector is the ultimate objective.