The Cabinet okay for amendments to the Real Estate Regulatory Bill is notable, but given the sheer scale of the problem, the massive housing shortage and the need for rapid urbanisation, what?s required is much more proactive policy action. We clearly need improved transparency and accountability to boost investment ? including institutional funds flow ? into the real estate sector. The Bill mandates every state to set up a Real Estate Regulatory Authority (RERA), entrusted with many tasks to protect the interests of consumers.
Developers have to file project details with it and the design and specifications can be changed only with approval of twothirds of the buyers. The idea is to discourage builders from shortchanging buyers by drastically altering their initial plans mid-way. Reportedly, the wrong disclosure of information or not complying with them would invite penal charges of 5% of project costs, but often enough, builders find non-compliance, say by way of extra floors, more attractive. The penalty can go up.
The amended Bill brings down the proportion of customer advances for each project that developers have to hold would need to hold from 70% to 50%. This offers builders more flexibility without permitting serial project launches without mobilising sufficient finances. Also, commercial and not just residential real estate has been brought under regulatory purview. However, the non-inclusion of government and municipal agencies from the scope of the Bill is glaring. How are we to end real estate acting as a repository of corruption and black money, without clearances being made transparent? Real estate must become a fully accounted for activity with a lower risk premium for banks than other businesses without such ready collateral. The Bill does not quite make the cut.