Published On: Fri, Dec 9th, 2011

Draft Regulatory Bill needs in-depth study: MCHI

By Accommodation Times (www.accommodationtimes.com)

Time-frame for suggestions needs to be extended

MUMBAI: The proposed real estate regulator bill has been opposed by the realtor as well as the state government. In media conclave Paras Gundecha, President, Maharashtra Chamber of Housing Industry (MCHI) said “we may be looking at a return to ‘License Raj’ if the draft Real Estate Regulation and Development Bill is passed.
“The Government of India realized the havoc played by the License Raj and therefore boldly took steps to eradicate the License Raj hampering the growth of India. The Draft Regulatory Bill will see a return to ‘License Raj’.” He added that it was not just the developer/ builder who should be held responsible in case of delays in completing projects, as there are multiple factors which are beyond the control of the developer. Therefore only the developer should not be held responsible and consequently penalized to the extent of jail or revoking the registration of the project. In the interest of all stake holders, competent authorities including corporations, and govt. authorities also should be made responsible for giving time bound sanctions and permissions, and hence, its suggested that one window clearance be implemented.
The Government of India, Ministry of Housing and Urban Poverty Alleviation, has proposed a Regulatory Bill to regulate the Real Estate Industry in the country. The Ministry has uploaded the said draft bill on their website on 9th November 2011 and has asked for suggestions within 30 days.
The proposed Bill has far reaching effects on the Housing Industry and the work thereof, said Paras Gundecha. “It is the first comprehensive Bill of its nature which affects almost every aspect of Housing Industry starting from and reaching up to managing, sale and delivery of Projects in future,” he said.
Some provisions are likely to create practical problems, said the MCHI President. “There is an escrow provision, that Developers should deposit 70 per cent of the amount realized from the customers in a separate bank account. While it may look as if this provision is made to protect the interest of consumer, but consider a situation where case the project is delayed or developer is unable to complete the work as per schedule as approved by the ‘competent authority’. The project will be in doldrums, and the consumer or a group of consumers will not be in a position to complete the project as they do not have expertise. In such an event, there will be a ‘tug of war’ between the competent authority and developer, and the consumer will be trapped in between.” In the event that this is considered, he added, the 70 per cent aspect should cover only construction costs – other costs, including land and other aspects should be excluded.
The Draft Regulatory Bill says the Registration authority is not empowered to extend registration beyond two extensions. “In the event that a project is delayed by reasons beyond control of the developer, and the two extensions are through, the fate of the project will be sealed – the second extension would be final, and the project would get stalled indefinitely as a result.”
The Draft Regulatory Bill, said Paras Gundecha, has a provision for developers uploading plans of the project on the RERA website. “Ideally, the competent authority should restrict the exhibitions of plans only to the consumer or flat purchaser. They have failed to visualize the consequences of open information of project, especially plans, and their likely misuse by anti-social elements or terrorists,” he said.

MCHI is of the opinion that the Bill requires in-depth study and intense interaction between the Government and all Project Proponents, who are concerned in respect of scope of the Bill, which should include all tenants / stakeholders like Promoters, Developers, Consumers, Bankers, Consultants and Professionals, including Lawyers, Architects and Engineers and government agencies added the MCHI President.
Boman Irani, Hon. Secretary, MCHI said that the aforesaid Bill should be extensively discussed and debated internally and externally by the Government with the Housing Industry and after considering all the concerns, be revised and finalized before legislative steps for enacting the Bill into an Act is undertaken by the Government.
“The period of thirty days to give response to the Bill is inadequate for the general public or by Housing Industry or any other interested parties, persons or groups,” he said.
On the face of it, the Regulatory Bill will bring back licensing system in the country which was abolished a decade back, said the MCHI President. “MCHI strongly objects to the Bill in any of its form as it will hamper the growth of the Housing sector and affect the economy,” he said, adding that if at all the Regulatory Bill is considered, the whole exercise will be futile without consulting any of the tenants/ stakeholders like Promoter, Developer, Consumer, Bankers, Consultants, Professionals like Lawyers, Architects and Engineers. “MCHI is of the clear view that without involving all stakeholders of the Real Estate sector, this exercise will be absolutely futile,” said Boman Irani.
He summed up by saying that a ‘regulator’, in most sectors, would define policy and be empowered to address issues at the policy level. “However, this is one rare case where the Regulator will look at the consumers directly, which clearly and dramatically will impact the Regulatory Bill, and create major impediments in development and Housing sector in the country. This Bill affects the most vital Industries in the Real Estate which contributes to the national economy and requires constructive interaction and debate on the scope and working of the proposed Bill.”
Making the last comments on the subject, Paras Gundecha pointed out that single window clearance, which would ensure homes could be delivered on time by developers/ builders, needed to be taken up on a priority basis. “And,” he said, “an appeal against any order of the Regulatory Authority would only be before the Supreme Court. This can be handled by the various High Courts, in whose jurisdiction the project lies,” he concluded.

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