Spare ongoing projects from this law: CREDAI

With the Real Estate (Regulation and Development) Bill, 2013 kicking up much dust, CREDAI (Confederation of Real Estate Developers’ Associations of India), an apex body of the real estate developers in the country, has been arguing that the legislation should create a balance between developers and the consumers and should be a practical one.

While protecting the interest of buyers, the law should encourage real estate growth in the country, says the relators’ body. Voicing the industry’s view points, Rohit Raj Modi, national vice president, CREDAI, spoke to Deccan Herald’s Ajith Athrady. Excerpts:

What is your view on Real Estate Regulation Bill?

CREDAI has welcomed the bill as it will help genuine developers as well as the consumers. It will bring in transparency and accountability in the real estate and housing transactions, which will infuse long term trust in the sector. It will also put an end to the fly-by-night operators, who brought lot of bad name to the sector. The bill will enable the sector to access capital and financial markets essential for its long term growth. Overall, it leads to transparency
in the sector and will make developers answerable at multiple levels.

What are the concerns of the CREDAI on the bill?

There are a few areas of concerns which the government should think over it. Firstly, on punishment, the government must clarify on the clauses related to penalty for willful default by the developers. Secondly, urban local bodies and development authorities should be brought under the ambit of the real estate regulator since the process of issuance of occupation certificate and completion certificate are under their control. The deadline should be fixed for urban local bodies, development authorities and other government bodies for giving pre and post construction clearances. The government must clarify as to who will be held responsible for delay in granting permission for the projects.  

Is there scope to make the bill more robust and if so, what are the industry’s suggestions?

Instead of only developers, the bill should bring architects, structural engineers and contractors under its ambit. As contractors or structural engineers play important role in construction, they should also be held accountable for the project implementation instead of only developers. Developers play only aggregators role.

How does the industry view the proposal on the real estate regulatory authority?

The government should not bring the on going projects under the ambit of this law. Let the government make separate rules for ongoing projects to ensure its speedy completion.  The provisions of the law should be applicable to prospective and not retrospective. If given a choice, any developers would like to complete the projects at the earliest. The retrospective effect of the bill would definitely cause delay in ongoing projects if they get entangled in the regulatory process.Only those projects, which gets all approvals from local bodies on or after the notification of the proposed legislation are issued, should be brought under the purview of the new law. The law should not be implemented on retrospective basis.

Why are developers opposing the move to deposit 70 per cent of money collected from buyers in escrow account to prevent diversion?

Instead of depositing 70 per cent of money in exclusive account, it should be limited to 50 per cent. As the cost of land is high in metro cities than cost of construction, if a developer deposits 70 per cent of money, he can’t develop the project at all. Depositing 70 per cent money in exclusive account is not viable to any developer. Depositing 50 per cent of money is reasonable and practical. Any law must protect the interests of both developers as well as the buyers.

With many developers unable to meet the deadline on delivery of houses or flats, what you expect from the government to boost the sector?

Due to slowdown in the sector for the past few years, several developers are facing problems and not able to fulfill their promises in delivery of flats or homes. To bail out the sector from the crisis, the government should ensure that home loan rate should be less than 8 per cent than current 9.75 per cent. Apart from this, the realty sector should be given the status of infrastructure sector and extended benefits accordingly.