Land row raises query: Why no real estate regulator in place

[webmaster]

Sudhir Vohra, TNN | Jul 17, 2011,

With the apex court upholding the judgment of Allahabad High Court on the legality of the land acquisition process in Greater Noida and with more land owners joining issue — more instances of land being acquired under the emergency clause of the Land Acquisition Act are coming to light — the pall of gloom over the real estate sector is not likely to lift any sooner.

Builders and consumers, who have been at the receiving end, are already at loggerheads. The plight of the consumers won't have been so miserable had a real estate regulator been in place. For about seven years now, people have been clamouring for a special Act meant to protect investors in real estate. The objective is to put in place a specialized domain knowledge-based regulator who would ensure that the consumer is protected both from the vagaries of the builder and from the callousness of the government.

The RERA (Real Estate Regulatory Authority) Bill has been gathering dust with the Centre for about five years now — that's when the first draft was circulated for seeking public views.

The bill seeks to establish the responsibility of the promoters (read builders) towards the consumers. It has sections pertaining to issues like how the promoter should issue advertisements before beginning construction; how he would be able to request for and receive advance payments for the apartments he is to build; how he could receive payments while constructing; and how he would hand over common areas etc to the resident welfare associations after the projects are completed.

The bill also seeks to define the role of the consumer and caters to issues like supply of essential services, adherence to local laws and approvals of all kinds. It also addresses issues connected to mortgages and consents required for such mortgages besides the liabilities of consumers.

Significantly, the Bill deals with the responsibility of promoters regarding the veracity of the facts placed in advertisements or prospectus in order to ensure that the consumer gets the right information before he makes a choice or purchase.

If the RERA bill had been legislated and been in force today, some of the pain which consumers are facing today may have been averted. The average age of home loan applicants has now dropped to 28 — most consumers are young people just starting out in life. Perhaps young enough to not want to be bothered with the kind of problems which such a lack of regulation have once again thrown up.

One can understand why the real estate sector is not keen to allow the RERA bill to see the light of day — when such an authority is established, it would make the promoter accountable in ways which he is not used to now. The sector may have pulled strings and ensured that such a law is not enacted — possibly this may be the cause for the delay in bringing it before Parliament.

It is time the Central Government woke up to the fact that such reforms are inevitable in the urban sector. Sooner or later, these reforms will have to be enacted if the sector is to develop without the ambiguities and scandals it is ridden with today. Perhaps, the Greater Noida meltdown will spur the government into action on this most important piece of legislation.

(Sudhir Vohra is an architect and urban planner)

http://timesofindia.indiatimes.com/city ... 262116.cms

[yomkippur]

Union minister for housing and urban poverty alleviation Kumari Selja has said that the Centre is expected to bring the real estate regulator bill in the winter session. "We have received the law ministry's view on this legislation. Respective state governments can then frame their own regulatory bill to improve governance and transparency in the real estate sector," said Selja, while inaugurating the 8th international realty summit organized by the Federation of Chamber of Commerce and Industry ( on 23 Sept 20110

The realty sector's image has suffered a huge dent due to recent housing loan scam, judgments by the Competition Commission of India and issues relating to land acquisition for real estate projects across the country, Selja said.

Selja added, "Approval procedures for realty projects need to be improved to cut down the time required in obtaining clearances. We have formed a task force in the ministry, with the states and industry representatives as members to steer it. The panel is consulting industry bodies and states for suggestions to streamline the existing procedures. Ficci's study on the subject will also be considered by the task force," the minister stated.

She appealed to the real estate industry to come forward to build low-cost houses.

As part of reforms in our schemes, a certain percentage of land has to be reserved for lower income groups in housing projects. We are working with the states to see that reservation does not affect the bottomline of the sector,'' she said.

Selja said that the centre is also hopeful that the new Land Acquisition Bill would be passed in the winter session of Parliament.

Land acquisition challenges need to be overcome for growth of the real estate sector. The new Land Acquisition Bill presented in Parliament would be passed after taking all the concerns on board. This should happen before the end of the winter session of Parliament,'' she added.

The Bill would try to make land owners partners in urbanisation and adequately compensate all persons dependent on the land being acquired. This would give a humane face to land acquisition and would make development move inclusive, hassle-free and sustainable.

[avnish]

COMPARATIVE STUDY OF NDA RERA VS UPA RERA NDA DILUTED FOLLOWING CLAUSES

http://forum.therealtypaper.com/forum/r ... uses/#p319

1. Section 6 - The registration granted under section 5 may be extended by the Authority on an application made by the promoter under such conditions as may be prescribed and in such form and on payment of such fee as may be specified by the regulations made by the Authority:
Modi Government Bill Says: "Section 2 (j) ‘‘carpet area’’ means the net usable floor area of an apartment, excluding the area covered by the walls.
Explanation -For the purpose of this clause, the term ""net usable floor area"" shall mean the ""rentable area"" as defined under the National Building Code, 2005 or its later versions, as applicable.
"
Comments: The added explanation defeats the uniformity sought to be brought in through the concept of carpet area. The term “rentable area” enables the builders to confuse and misguide the buyers in regard to the actual area being offered. Moreover, it has been linked to National Building Code, 2005 or its latest versions. Which means it can be easily changed later without even coming to Parliament.

2 "The builder was not allowed to alter the proposed structure from what was offered by him.
Section 14 of the Bill obligated the builder to rectify any structural defects that may occur in a building up to after 2 years of handing over of possession to the buyer.
"
Modi Government says: "Section 14(2)(i)
Newly introduced proviso w.r.t. alteration of structural designs: Provided the promoter may make such minor additions or alterations as may be required by the allottee, or such minor changes or alterations as may be necessary due to architectural and structural reasons duly recommended and verified by an authorized Architect or Engineer after proper declaration and intimation to the allottee.

Section 14(2)(ii)- any other alterations or additions in the plans, structural designs and
specifications of the buildings or the common areas within the project without the previous written consent of at-least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such building.
"
Comments: "Scope of Section 14 has been majorly reduced. Under the new amendments, the responsibility of the builder towards future defects in the structural designs, has been waived off.

3. In addition to this the new provisions in Section 14 of the proposed law now freely permits the builder to make alterations in the structural design and specifications of the building even though such alterations may make the product completely different from the terms at the time of sale to the buyer. Obtaining two-thirds of the allottees consent would not be difficult at all because of the deletion of quarterly disclosure of sales. (kindly look at the next point)
"
Section 5 – Grant of Registration to Real Estate Project
Modi Government Bill:Provided that the Authority may carry out post registration verification of the application and pass such orders within three months, as deemed necessary in case of incomplete or defective applications, including revocation of registration under section 7:
Comments: "Provision for prior scrutiny of project applications before grant of registration/ commencement certificate was introduced to oppress any subsequent malpractices that may victimize the buyer.

However, the provision has been diluted giving leeway to builders who can now obtain commencement certificates without being qualified for the same.
"
4. Section 4(1)(e) proforma of the agreements proposed to be signed with the allottees;

Modi Government Bill says:Section 4(1)(e) proforma of the agreement of sale proposed to be signed with the allottees;

Comments: "The Bill introduced by the UPA provided that 'all' builder buyers agreements (including fitting fixtures, furnishsing agreements) will be scrutinized by the Authority, however the section has now been amended to favour the builders lobby by reducing the scope of the provision to only 'agreement to sell'.
This gives a free pass to the builder to easily get away in an event of violation of terms of agreements not covered under this section."

5, "Section 61. (1) For the purpose of adjudging compensation under sections 12, 14 and
section 16, the Authority shall appoint any officer not below the rank of Joint Secretary to the State Government to be an adjudicating officer for holding an inquiry in the prescribed manner, after giving any person concerned a reasonable opportunity of being heard:"

Modi Government says: "Section 61.(1) For the purpose of adjudging under sections 12, 14, 16 and section 17, the Authority shall appoint, in consultation with the appropriate Government, one or more judicial officer as deemed necessary, who is or has been a District Judge to be an adjudicating officer for holding an inquiry in
the prescribed""." "Section 61(1) was intended to provide a simplified mechanism of redressal to the buyer incase the builder attempts to cheat him by projecting false advertisements, fails to give possession in time etc.

Comment: Under the UPA Bill, the redressal authority was to be an executive functionary of an officer of the rank of Joint Secretary or above.
This pro-buyer provision has also been diluted by replacing it with a complex judicial process. Under the new Bill, the consumers will now have to raise their issue before a Judicial Authority i.e. a District Judge. "
6. """Section 4(2)(i)(D) that seventy per cent., or such lesser per cent. as notified by the appropriate Government, of the amounts realised for the real estate project from
the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank within a period of fifteen days of its realisation
to cover the cost of construction and shall be used only for that purpose."""
Modi Government Bill says "Section 4(2)(i)(D) that fifty per cent., or such lesser per cent. as notified by the appropriate Government, of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank within a period of fifteen days of its realisation to cover the cost of construction and shall be used only for that purpose."

Comment: "This clause was introduced with the aim to ensure timely completion of projects. In the past, there have been enormous incidents wherein the builders siphon off the money realised from buyers and leave the project incomplete. The focus was also to prevent of diversion of funds which is the genesis of black money and very prevalent in real estate sector.

Due to the pressure from the real estate lobby, this clause has now been eased by lowering the builders obligation from 70% to 50% in regard to the amount realised from a particular project.

Views of Standing Committee on the provision (Extracts from the Feb, 2014 report of the Standing Committee):
Para - 3.38 During the Course of oral evidence, Secretary, Department of Financial Services, Ministry of Finance deposed as under: ""70% will go to escrow account, it is a good suggestion. It is very important this will lead to prevention of diversion of funds and black money both of which are prevalent in real estate sector. On the whole it is a welcome step.""

Para - 3.39
""According to the Committee this will further ensure the timely completion of the project as well as proper utilisation of money on the project without its diversion for some other projects. Therefore, the Committee are not inclined to tinker with this provision of the Bill.""
"
FINAL COMMENT: There is no doubt present bill has been diluted in many ways to comfort the builders, But modi Ji has taken far more than he has given to builders by two measures.

1st By bringing all the ongoing projects under the purview of this Regulator, which will give big relief to 6.5 lac home buyers stranded for years and who have been taken for ride by unscrupulous builders.
2nd Major plus point is now all the Real Estate projects irrespective of the fact whether they are Residential or Commercial in nature comes under the scrutiny of Regulator.

But major cause of concern in both the bills is fast resolution of the grievances of buyers and fair compensation for the sufferings of the Buyers. Lets see how things move.

[naveenarichwal]

To know the realty of REGULATORS in India please read this. Those who are eagerly waiting for Real estate regulator should never forget that the police was formed to regulate crime in society, but it has turned into the biggest perpetrators of.crime.Until unless the corrupt & criminal politician in system are there, they will never allow any regulator, judiciary or police to work as per law.
http://m.timesofindia.com/india/Karnata ... 848598.cms