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How Real Estate Regulatory Bill can help ailing Real Estate sector

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Construction and Real Estate sectors have a bad name today, due to many unethical builders, brokers, extortionists, and land mafia, who have controlled the sector for a long time now.

NewsGram had previously covered one such instance of alleged extortion and unnecessary delay in handing over the flats to the customers in Mumbai by Runwal Greens.

The Real Estate Regulatory Bill, which has been pending for a long time, if passed, may go a long way in tackling various issues that ails this sector. Here is an article by Anil Pharande, Chairman of Pharande Spaces, a leading construction and development firm in Western Pune, explaining why the Bill is very crucial for cleaning up the Real Estate sector.

The Real Estate Regulatory Bill has been waiting for a long time to be passed as a law. Though several new recommendations by various bodies were incorporated into the draft Bill and approved by the cabinet, it has still not been passed as an enforceable law by the Parliament. It is now high time that this happens – for several reasons.

The changes which have been made in the original draft over time are quite progressive. For instance, a real estate developer must keep a minimum balance of 50% of the funds collected for his project in an escrow account. Before the Real Estate Regulatory Bill was drafted, the concept of creating an escrow account for a real estate project in which to hold funds for a project did not exist at all. In the absence of such a regulation, builders are at liberty to siphon off funds collected for their projects and use them to purchase more land or in the construction of other projects.

The Real Estate Regulatory Bill will make it compulsory for builders to ensure that at least 50% of such funds will remain reserved solely for the development of the project for which they were collected from buyers. To ensure that this actually happens, they will have to pay these funds into an escrow account within 15 days. While this is definitely a rule which will protect the interests of property buyers to some extent, it still means that builders can use half of the funds collected from buyers for other purposes.

This gives rise to a pertinent question – why would they want to do that? Isn’t it in the builder’s own interest to complete a project on time? Unfortunately, many developers don’t look at it that way at all. The reason why they divert funds from ongoing projects is so that they can purchase land to build land banks, which allows them to showcase more projects on their balance sheets. Doing so makes allows them to raise more capital from banks or private equity funds, and also to give an inflated image of the size of their business.

There have been several other changes to the draft Real Estate Regulatory Bill, as well – each giving a clear message that the era in which developers could do whatever they want is going to be history once it is implemented. Not least among these important changes is that developers will have to register all projects which they are constructing within 3 months once the Bill becomes a law. If they fail to do so, they will be penalized to the tune of 10% of the overall project cost, and will have to bear an additional penalty of 10% and even face a prison term for any further delay to register their project.

The Real Estate regulatory Bill will also bring an end to developers’ freedom to make changes in the original plans or structural designs of their projects once they have been registered. They will only be able to make any changes if they are able to get the signed approval of at least 2/3rds of those who have invested into the project. Projects which do not have completion certificates issued as yet are now also included, meaning that an even bigger segment of buyers will benefit from the protection of their interests.

The current version of the Real Estate Regulatory Bill also has another noteworthy amendment in the fact that it now includes commercial office projects. In other words, investors who have plugged their funds into commercial office properties will also be protected by the Bill. Of course, the fact is that 85% of the Indian real estate market consists of the residential sector. However, this amendment is important because it will help the sector become more transparent in every respect, and not just in some segments. Real estate brokers and agents are now also included in the latest draft of the Bill, which means that will also be liable for legal action if they engage in any practices which are not in line with the new law.

Finally, the latest draft of the Real Estate Regulatory Bill permits customers with grievances to move the consumer courts, and does not position itself as their only legal recourse.

With all these positive amendments now in place, the Real Estate regulatory Bill is indeed a powerful means to make the chronically opaque Indian real estate sector more transparent. Once it becomes a law, people will feel more confident in investing into real estate, and this will result in the revival which everyone has been waiting for. This confidence will take time to become evident, but it will definitely come – and when it does, we will see massive changes on the ground.

Also Read: Runwal Greens: Luxury builders or unethical extortionists?

Next Story

Ultimate Real Estate Guide For First-Time Homebuyers In India

An increasing number of people today are looking to buy their dream homes. The current Indian real estate market is flourishing, making it the best time to invest in the real estate industry.

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Homebuyers have multiple choices available to choose from -- apartments and flats to villas and villaments. Pixabay

 

In India, owning a home gives people a sense of pride, security and stability. A host of first-time homebuyer benefits and a slew of economic policies are making house ownership accessible to all. An increasing number of people today are looking to buy their dream homes. The current Indian real estate market is flourishing, making it the best time to invest in the real estate industry.

If you are looking for real estate in Pune, Kolte Patil Three Jewels is an integrated township spanning 35 acres offering well-spaced apartments amidst wide expanses of nature.

The home buying process can seem confusing if you are a first-time homebuyer. This article presents the ultimate real estate guide to help you understand the various steps involved in a home buying process:

Houses
If you are a first-time homebuyer, you may take the help of the above real estate guide to walk you through the critical areas of the home buying process. Investing in real estate is a huge commitment. VOA

Assess your needs

Homebuyers have multiple choices available to choose from — apartments and flats to villas and villaments. You can assess your needs by asking questions such as what kinds of accommodation would suit your family size. Does it have all the amenities you are looking for? Is it something you can accommodate in the current budget?

Check your credit score

Most first-time homebuyers opt for a home loan as funding a new home entirely from one’s savings can become burdensome. To know your status of being approved for a home loan, you may want to check your CIBIL score. A low CIBIL score could mar one’s chances to obtain credit.

Check the builder’s credibility

Once you have finalised the location and the type of residential building, look at projects managed by reputed builders in the area. Read more about their past projects, whether they complete housing plans on time, quality of construction, etc. before finalising on a property. You can also read homebuyers’ reviews that have purchased properties from a particular builder.

Buyer-builder agreement

This is a three-way contract between the bank, builder and you to be signed when booking a house. This contract is finalised with a token fee that seals the agreement. Ensure you read all the terms, conditions and understand them well. You could also seek the services of a property lawyer to help you understand the clauses.

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Once you have finalised the location and the property type, seek top builders offering projects in the area and verify their background. Pixabay

Approvals and licenses

You can save yourself from unwanted hassles by ensuring a builder has the necessary legal approvals and certifications in place. Some documents that to need to be checked include title deeds, RERA certificate, encumbrance certificate, NOC by relevant bodies, environmental clearances and so on.  

If you are looking for financial assistance to purchase a property in Pune, you can avail a home loan from Bajaj Finserv Homes & Loans with credit up to Rs. 3.5 crore. Avail an easy loan with minimal documentation and features like property search assistance, flexible tenors, and easy part-prepayment and foreclosure facility.

Summary

If you are a first-time homebuyer, you may take the help of the above real estate guide to walk you through the critical areas of the home buying process. Investing in real estate is a huge commitment. So, it is essential to assess your needs before you take the plunge. For example, if you are a family of four with kids, a property with necessary amenities like schools and nearby kids’ play areas can be an advantage. It is equally vital to check your CIBIL score to ensure you qualify for a home loan. Once you have finalised the location and the property type, seek top builders offering projects in the area and verify their background. Book the property after ensuring all legal documentation is in place and you have fully understood the terms and conditions of the builder-buyer agreement.    

Three Jewels in Pune is a magnificent township located at Kondhwa. The housing project offers 1 BHK, 2 BHK and 3 BHK flats that are well-designed, spacious and cater to people of different income groups. Three Jewels provides its residents with excellent amenities that include a swimming pool, flower garden, library, event space, multipurpose courts, conference room, reserved parking, kids play area, gymnasium, indoor games room and much more.

Also Read: Microsoft to Increase Skype Group Members to 50

Get the best financial assistance to buy a property in Pune, by availing a home loan from Bajaj Finserv Homes & Loans. Avail an easy loan up to Rs. 3.5 crore with minimal documentation and other features such as property assistance, easy tenors, and simple foreclosure and part-prepayment facility.