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.
