Bengaluru: Besides an IT boom, Bengaluru has also seen a realty boom over the last decade , and along with it has come the ordeals of buyers, who have had to put up with delay in possession of apartments, low quality construction and so on. Now that the Rajya Sabha has passed the Real Estate (Regulation and Development) Bill, which aims at fixing responsibility on builders rather than buyers, can the city hope to get some reprieve from the various ills dogging the sector?
Responding to complaints about projects being delayed inordinately, the new legislation provides for establishing Real Estate Regulatory Authorities in states to regulate transactions relating to both residential and commercial projects and ensure their timely completion and handover. It covers any project more than 500 sq. metres in size or which has more than eight apartments.
It also makes it compulsory for builders to deposit at least 70 per cent of their collections from buyers in a separate escrow account to cover cost of construction and land and makes it clear that no pre-launching of projects will be allowed without getting the approval of the local development or municipal authority and the required registration from the regulator. It prescribes imprisonment of upto three years for promoters and upto one year for real estate agents and buyers, besides penalties, if they should be found guilty of violating orders of appellate tribunals.
Not entirely happy with it, however, urban planner Ashwin Mahesh , believes keeping a huge sum in escrow will only increase the cost of construction. Instead, the government needs to de-zone agriculture land and provide low cost housing for economically weaker sections, in his view. “The government must focus on regulating land reforms rather than exercising financial control over the real estate industry. The real culprit in any land related business is the government. Successive governments have failed to do 100 per cent digitization of properties. And legal complexities delay projects causing inconvenience to all involved ,” he notes.
‘Government can’t paint everyone with the same brush’
While welcoming the Real Estate (Regulation and Development) Bill, which aims to protects the interests of property buyers, Mr Farooq Mahmood, chairman and managing director of Silverline Realty, believes it is a little too harsh on the developer, realtor and broker.
“The government needs to address certain lacunae in the bill. It must realise that it cannot paint everyone with the same brush and should classify or distinguish the lapses on part of the builders and punish them accordingly,” he maintains. But he , however , feels it is a positive move on the whole as it brings in transparency along with international investments into the market to provide housing.
“It is a lesson to second and third grade developers or builders as it either flushes them out of the industry or forces them to compete for quality in the industry. It also brings in more accountability on part of the builders,” he says, adding that depositing 70 per cent of the money collected from buyers in a separate escrow will increase the faith of the consumers in the developer.
