Importance of Regulatory framework and policies in Real Estate

The Real Estate industry is one of the prime drivers of growth of our economy and a key contributor to its GDP growth. Besides, it is second only to the agricultural sector in employment generation. However, despite the tremendous growth in Real estate sector, it is still quite unorganised without proper regulations being implemented to safeguard the interests of stakeholders and an industry status still eluding it.

Real Estate (Regulation and Development) Bill, 2013

In order to bring about systematic changes in the Real estate sector and make it more organised and regulated, the government decided to implement a regulatory framework along with well-defined policies. This move was also meant to substantiate the government’s agenda to bring about economic reforms through poverty alleviation and by providing affordable housing to economically weaker sections of society. Eventually after considerable debate and deliberations on the issue the Real Estate (Regulation and Development) Bill, 2013 was approved by the Union Cabinet in June, 2013. Subsequently, it was introduced in the Rajya Sabha in August, 2013.

Importance of regulations in the sector

The real estate sector at present is associated with many vices, which hopefully can be cleansed by bringing about stringent regulations and effective policies. One of the pressing needs is to rid it from the influence of black money supply. Currently, the sector contributes to about 70 per cent of the black money generated in our country. Considering the impact the sector has created in the form of contribution to the total GDP of our country as well as in employment generation, both skilled and unskilled, it is high time that the government accords the industry status to the sector. Such a move assumes more significance especially in the backdrop of the government opening up the sector to FDI, thereby benefiting developers in a large way.

Stakeholders

Implementation of regulations in the real estate sectors should be carried out in such a manner that clear roles are assigned for all the stakeholders involved, without any overlap or trespass into each other’s territory. Some of the major stakeholders in the regulatory process are:

·  The State governments by delegating the implementation of regulations through their Housing ministry. This will then be sub-allotted to different districts, municipalities and panchayats.

·  Builders and developers through a self-regulatory body like CREDAI.

·  Banks and other financial institutions through the National Housing Bank (NHB)/RBI.

·  Real estate agents and brokers through a body like National Association of Realtors (NAR) India.

·  Buyers or end users.

Role of the Government

The role of the government as a regulator is very crucial since it has to clearly define its responsibilities in providing compensation for those affected due to the government’s failures. In this regard, computerisation of government functions and networking it with other departments across States assumes utmost importance. Moreover, data should be updated regularly with easy access to the general public to various services like obtaining an Encumbrance certificate (EC) or Patta through designated service centers.

Role of Builders

Builders on their part should provide prospective buyers transparency with regards to the projects they are trying to sell. Moreover, they should ensure that proper approvals are got for their projects without misleading buyers. Those builders and developers following best practices can be rewarded by local bodies or government agencies. It is also important to impose strict penalties on those erring, and debar those who are regular offenders.

Role of NHB

The NHB should provide proper guidelines and clearly spell out their terms of finance for various housing projects. Priority should be given for low cost housing as well as economical and affordable housing projects with concessional rate of interest being granted for such projects. Besides, there should not be any hidden charges like processing fee and the loan term should be at least for five years. Moreover, various provisions should also be extended to those buying property in suburban as well as rural areas to facilitate reverse migration of those living in cities.

Role of Real Estate agents and buyers

Real estate agents and brokers should be well-qualified to pursue their profession and should always stick to the guidelines drawn by the NAR India. Professionalism and transparency are important qualities that they should pursue at all times. While the role of the buyer or end-user is minimal, it is of immense significance. They should be aware of the responsibilities of the other stakeholders so that their interests can be safeguarded.