Regulating real estate

Despite its unprecedented growth, the real estate and housing sector remains largely unregulated. Home buyers get instantly burdened with monthly loan instalments, but are left with little recourse when faced with delayed possession, fewer facilities, non-maintenance by builders and developers and real estate agents playing truant. The industry is also notorious for the use of black money. The Union Cabinet has approved changes to a Bill aimed at bringing accountability and transparency to the property market with a number of regulations. On paper, the proposed legislation looks set to change the rules of the game for the better. How it plays out on the ground is another matter, considering the extent of construction activity and the big money involved.

Each state, if the Bill is cleared by Parliament, will have a real estate regulator for fast-track settlement of disputes and compensation. All housing and commercial projects, including ongoing ones, will have to be registered so buyers have access to certified projects. Developers will have to advertise the carpet area, or the space within the walls of a flat, and not the common area. The names of all those associated with the projects would have to be made public. Against the 70 per cent proposed earlier, promoters will have to deposit 50 per cent of the buyers' money in a separate bank account. This will ensure that projects are completed within the stipulated time. There's more. Developers will need the consent of two-third buyers to change designs and specifications. Even brokers who sell flats and plots will have to get registered.

These measures, and some like refund with interest for delay in delivery, would not be easy to enforce. The industry is known to cut corners that are not easy to detect, is dominated by mega players and wields a huge influence in government circles. In such circumstances, strong laws won't work without empowered regulators, or it may just end up being another source of money-making. It would eventually again come down to buyers standing up for their rights. This time, they would have the law to back them.