The Union Cabinet of ministers has just cleared a bill to set up a real estate regulator. What does it mean to you?
Property is the single largest asset that an Indian saver creates for himself after long years of saving; most Indians do not invest in stocks or mutual funds. Over the decade or so, in tune with rising prosperity, real estate demand has been booming. However, this 
largest asset item has remained unregulated. This has led to soaring property prices and savers have been repeatedly short-changed by many unethical builders. Many flat-buyers find themselves paying bank loans while waiting to get possession for their flats. That apart, often flats are sold on the basis of super-built up area that include common facilities. To address these issues, the government is hoping to pass a real estate Act. The bill has just been passed by the Cabinet. Here are the main provisions of the bill.
Construction stage
Selling Stage
Violations, Grievance Redress
Anuj Puri, chairman & country head, Jones Lang LaSalle India has pointed out that “The Bill works both ways. While it aims to hold the developers accountable, it also looks to ensure that the allottees do not default in making payments.” However, the application of the provisions in the context of massive corruption and redtape is another matter. As Puri points out: “The Bill in its current form does not provide for any relief to builders.” It has been a constant complaint by developers that they experience long and inordinate delays besides the difficulty in obtaining approvals for construction from the multi-headed Government agencies, and they have stressed on the need for a single-window clearance to cut through the red tape. This issue does not find any mention in the Bill.
Right now, the Bill has only received the cabinet approval and could be made into an Act by passing an Ordinance.
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With such a scheme, the private sector construction companies can get large contracts and hence will bid competitively, and we may discover lower rates than what we imagine possible.
The bill if enacted in its present form will bring new construction to a halt and worsen the property market scenario. Consumer courts already exist and though there is scope for improvement in functioning of the courts, there was no need to create another grievance redressal mechanism.
If this Bill becomes law, builders can take VRS and go on a holiday for a few years - they lose nothing.