The Rajya Sabha’S approval to the much-awaited Real Estate Regulatory Bill proves there is indeed light at the end of tunnel. Most of the lacunae in the functioning of the sector can be attributed to the absence of clearly defined regulatory norms. However, it can now be said that things will gradually fall into place. Delays in project completion, misuse of funds by developers and ambiguity over saleable area are among factors that have depleted buyer’s trust over the years. This Bill is based on three major foundation stones: Transparency, Accountability and Efficiency. These have the power to tie all loose ends in the real estate sector. A genuine intention has been leveraged and the impact of this legislation will be large.
Based on our data, Urban Development Minister M. Venkaiah Naidu said, “As per available information for 27 major cities including 15 capitals, 2,349 to 4,488 new housing projects were launched every year between 2011 and 2015. Thus in these 27 cities during these last five years, a total of 17,526 projects were launched with a total investment value of Rs 13,69,820 crore.” (See table)
Project delays are the biggest bane of the Indian real estate sector and one of the key reasons for sky-high prices. The Real Estate Regulatory Bill, aimed at reducing delays and ensuring faster completion through Transparency, Accountability and Efficiency, is the need of the hour. Together, these elements will bring about efficiency by discarding any kind of deception in prices.
Incomplete projects have a huge negative bearing on India’s GDP. Delay in completion is a menace that has plagued the sector since long. For our analysis we have considered the total supply across all the 25 cities under our coverage universe. About 34 per cent of this supply is delayed by more than 12 months. This estimated delay of residential projects amounts to 1.32 per cent of GDP (2014-15) at current prices.
While the Bill protects consumer interest, faster approvals are also crucial for developers to avoid delays. Against this backdrop, regulatory authorities aim to promote single-window system of clearances for real estate projects, wherein both the projects and promoters can be graded along with digitisation of land records. However, the Bill has a long way to go as far as a faster sanctioning process is concerned.
Thus, the problem is only half-solved. The government has also mooted an ambitious policy called “Housing for All” for the urban poor, and without the proper regulatory mechanism in place, this policy will be unable to yield the desired results. The amendments are in the right direction, but it is imperative that they be implemented within the time frame when the momentum is intact. With the Cabinet nod to the amendments, the Bill is very close to becoming an Act, after which it’s the state’s responsibility to bring it to effect by appropriate measures.