Real Estate Bill Impact on property rates in India.

Will this bill change the Real Estate industry in India ? or there will be any impact on property buyers ?

Overall ,what is in store for stakeholders once the Bill takes effect ?

Indian government should ensure that the sprit of Bill is maintained and the regulator should think about the benefits of the property buyers and it does not become another department giving space for increased corruptions.

In some cities of India it is found that some developers launched projects with out all the necessary approvals.  Even some of the small developers launch their projects they collect the money from the property buyers and then they buy the land. 

I met to some property buyers they told me that at the time of booking developers shows rosy pictures in advertisement but when the project get completed the actual picture is something else. It will increase the transparency and also confidence of the buyers.

In India We have regulating body for banks, insurance, telecom, equity market but for real estate there is no regulation for real estate. Soon our parliament going to pass the Real Estate (Regulation and Development) Bill 2013.

Will this bill change the Real Estate industry in India ? or there will be any impact on property buyers ?

Overall ,what is in store for stakeholders once the Bill takes effect ?

Buyers have many reasons to cheer the real estate regulatory Bill as it includes many key provisions that are beneficial to them.The time frame for implementation of the Bill is envisaged beyond 2013 and impact of the Bill will be seen  later 2013.

After this Bill the cost for developers will increase. so can we say that that it will make any impact on property rates.

After this Bill takes place we may see a slowdown in launches of new projects, because the getting all the permissions in place is a long process. Listed real estate developers may face some concerns after the Bill is enforced.There can be also an upward pressure on prices as the builders has to wait to launch their projects with all the due approvals. However over the medium to long term, builders may see improvement in funding.

As the real estate sector is viewed as less risky, they may be able to access lower cost funding for their cash flow needs, boosting profitability. Over the next two to three decades, a cleaner and transparent real estate market, akin to the stock market, could be expected, Pointing to the complaints addressing mechanism, he was optimistic that similar to companies stating the number of pending shareholder issues, project brochures of property developers in the future may need to list outstanding complaints.

There is concern among small developers that the increased disclosure requirements may add to their costs.This Bill does not address concerns faced by property developers in obtaining permits and approvals.

. “The Government needs to ensure that the spirit of the Bill is maintained and the regulator does not become just another department giving room for increased corruption and delays,” Pai added.

Small and medium developers may face higher costs due to the vastly increased disclosures mandated by the Bill. This could also help bring in more credibility, and help attract investments from domestic and international funds.

PE investments in real estate have been decreasing in number and value this year, that offers PE funds in real estate, said this regulation would weed out short-term focused developers who entered the market for quick profit.

“The Bill may increase cost for developers but will mitigate a lot of risk in investment as there is higher transparency with the developer taking up ownership for disclosures. The uniformity of regulation and specifications across the country are positives for PE investors” said Mahipal Deora managing director BlueGate Properties.

There are, however, some concerns about property prices increasing as a result of the provisions.

Developers indicated that if the Bill increases the costs for them, it will likely be passed on to the buyer, but the timely delivery of projects may offset this cost increase.

The Bill imposes strict guidelines on advertisement and prospectus from builders and also has provisions for claiming compensation for loss caused by misleading statements.

This, along with selling based on carpet area, should deter misleading advertising and lofty promises. Buyers have had limited bargaining power and no easy recourse when the builder reneges on promises.

The provision in the Bill to set up an appellate panel to take up disputes between buyers and builders will help in the speedy resolution of issues such as delays, change in specifications, and so on that are typically faced by buyers.