Real estate: Customer will finally be king

The long-awaited Real Estate (Regulation and Development) Bill, which protects the interest of the buyer who sometimes has to wait more than 10 years to get his flat and has no recourse to justice, was finally passed in the Rajya Sabha unanimously and is expected to be passed in the Lok Sabha next week. The Bill makes it mandatory for all real estate projects, even those under construction, to be registered with the regulatory authorities to whom they must provide project details, including of the agreement signed with the buyer and the names of real estate agents, contractors, architects and structural engineers.

The details will have to be given in advertisements that builders put out and will stop misselling of projects. This will bring in much-needed transparency and make the industry more organised. The most important advantage flowing out of this bill is that for the first time the home buyer will have time-bound resolutions of their complaints before the appellate authorities and the regulator.

One fallout of this Bill is it could curb unaccounted money entering the real estate industry, the biggest source of black-money generation. The builder will have to keep 70 per cent of the amount through cheques in an escrow account in a bank.

There is, however, one big lacuna and one wonders why, and how, the legislators missed it. It did not include other stakeholders, like the municipal corporations and councils and local bodies, many of whom are notorious for being the reasons for delays in giving permissions and no-objection certificates. They are also a major source of corruption as nothing happens without palms being greased.

The developers no doubt feel the Bill is heavily tilted towards the customers. But it’s time customers became king in this new era. Of course, the builders have a legitimate grouse as the Bill does not provide for single-window clearance which they have been demanding.

This Bill has been hanging fire since June 2013, when the draft was prepared and then approved by the Union Cabinet, with the amendments, in December 2014. This is indeed a major reform and, as industry analysts say, will surely attract foreign investment to the sector. Such a bill was long overdue for an industry that has over 76,100 real estate firms and many more agents. Unlike the telecom and insurance industries, the real estate sector, which not only has thousands of players but affects the life and shelter of millions, was unregulated. It is hoped that no further time will be lost in converting this bill into law.