Needed regulator

Needed regulator

The decision to set up a regulator for the real estate sector was long overdue and is therefore welcome.

The Union cabinet has cleared legislation for the purpose and the bill may be introduced in the next session of Parliament. With growing urbanisation in the country and the increase in the size of the middle class, housing has become big business. The proliferation of real estate companies in the last few years is proof of that. It is not organised the way a business of its size should be, with fly by night operators and individual actors existing side by side with small and big companies. The sector is riddled with corruption and malpractices and most people who have had dealings with them can vouchsafe for that. It is also a wellspring of unaccounted money. Therefore an effective institutional mechanism to regulate it is very much needed.

Under the proposed legislation all real estate developers who have projects above a specified size will have to be registered with the regulatory authority before selling or advertising their projects. Safeguards have been proposed against usual malpractices like selling unreal space like the superbuilt up area, mixing up of accounts of different projects and collection of money from buyers before the project is approved. Developers  will also have to put up complete details about their projects on their web sites. Penalties for violation including fines and prison terms have been prescribed. All these may help to bring in better transparency in the working of the sector. It was lack of authentic information for buyers and the absence of fear of retribution on the part of developers that have largely contributed to the prevalence of many unfair practices in the sector.

If the regulatory mechanism works well it will give credibility to the entire sector. It is not because there are no laws to penalise wrongdoers that many developers have got away with unfair practices. The real estate sector has always had high connections and has got away with many illegalities. It is not easy for home buyers to wage a prolonged legal battle to get justice. Consumer courts have been available for redressal of grievances but their effectiveness has  also been limited. The advantage of the proposed legislation is that it is specifically meant for the sector. The regulator should have real powers and independence to enforce the norms and rules prescribed in the legislation.

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