Safeguarding flat buyers
The Centre plans to introduce an anti-discriminatory clause in the Real Estate Act to stop the harassment buyers face at the hands of builders on the basis of their religion, caste, marital status, and dietary preferences, according to recent media reports. In March, the NDA government passed the Real Estate (Regulation and Development) Bill, which gives powers to a regulatory body to oversee all transactions between buyers and sellers, and take punitive action against those caught violating the norms. One of the fundamental problems the Act seeks to resolve is the extensive level of information asymmetry that exists between real estate promoters/agents and home buyers. Under the earlier norms, home buyers had no means to know about the real status of the project. In most cases, home buyers would invest their money without having any real information about the project.
The new legislation seeks to address this information asymmetry by setting up real estate regulators in all states and Union Territories. Before every real estate promoter begins to sell or advertise a project, it will have to register with the Real Estate Regulatory Authority of that particular state or Union Territory. In its application to the regulator, the real estate promoter must furnish key details like the projects already launched in the past five years, and their current status. If certain projects have been delayed beyond the original date of completion, the promoter must explain the reasons behind them.
“Over and above this an authenticated copy of the approvals and commencement certificate from the competent authority also needs to be submitted,” writes Vivek Kaul, the author of the well-known 'Easy Money' trilogy. “Other important details like land title, the layout plan for the proposed project, the location details of the project, also need to be submitted to the regulator.” Once the approval for a project is granted by the regulator, the promoter is now rule-bound to upload all these details on to the regulator’s website. If the promoter seeks to advertise the project, it will have paste the precise link for the project details uploaded on the regulator’s website. More importantly, at the time of booking, the promoter must furnish the precise schedule of when the project is to be completed, which includes important provisions for electricity, sanitation, and running water. What usually happens in many instances is that homes and apartments are often sold without the basic civic infrastructure in place, leaving the buyer stranded. In asking the promoter to furnish all these details, the bill seeks to protect the home buyer from scenarios where he/she buys an apartment without a proper water connection. These are only some of the proposed consumer-friendly measures listed in the Act.
According to the new rules, which will be notified by October 31, anyone found flouting the norms will be subjected to a jail term of up to three years and/or fine. The new anti-discriminatory clause could prove a game-changer, especially in cities such as Mumbai and Delhi, where housing apartheid is still prevalent. At present, India does not have an anti-discriminatory provision in its housing sector, unlike the US and many member states of the European Union. For example, the federal Fair Housing Act in America outlaws the refusal to sell or rent a house to any person based on his religion, race, color, sex, or ethnic origin. In India, there have been several reported instances of access to housing being denied based on prejudices arising out of a person’s religion, caste and other identity markers. But the current Real Estate Act only covers transactions between builders and home-buyers, and not between landlords and tenants. Even if the government introduces this progressive clause in the Act, those looking to rent homes will not be protected. Reports indicate that the government is looking to include a similar anti-discriminatory clause in the draft model Renting Housing policy, which will be notified in the near future. However, according to a recent Indian Express report, the model policy will not have the same enforceability as the Real Estate Act. What’s worse, it will be very difficult to impose such provisions on a privately-held property.
Various studies have detailed the stark reality of housing apartheid in our cities. The UN University World Institute for Development Economic Research released a study last month, which documented how Muslims face serious disadvantages when it comes to finding a rental accommodation in the National Capital Region (NCR). It also noted a bias against those from Scheduled Castes or other backward classes. Another study last year, led by Prof SK Thorat, Chairman of the Indian Council of Social Science Research, found that there was a significant exclusion of Dalits and Muslims from available rented accommodation in the five metropolitan areas of the NCR. The chances of Dalits and Muslims finding rented accommodation or a house fell in the event of a face to face meeting between the prospective tenants and house/flat owners. There is a significant “market failure”, where even financial prosperity, “does not allow you to buy your way out of discrimination”. In other words, the study was a damning indictment of the social discrimination prevalent in our urban centers where “non-monetary motive often prevails among landlords renting out houses”. Such segregation extends from outright refusal for accommodation to differential terms and condition on rent agreements, as compared to tenants who do not belong to either community. Unfortunately, housing apartheid is not restricted to metropolitan areas within NCR.
Such practices are now commonplace in virtually every Indian city. In a stirring column for this newspaper, the late Praful Bidwai wrote that such segregation excludes such individuals from civic life and citizenship altogether. To punish discrimination against Dalits, India only has the SC-ST (Prevention of Atrocities Act). Although, the Indian Constitution, under Article 16, is clear that no form of discrimination is allowed at the workplace of government, it does not have a law which protects citizens against discrimination by those in non-State institutions, which in this case contain both landlords and builders. Lawyers and activists across the board have recommended the need for a specific legal recourse for the affected citizens. The Centre must listen to their pleas and extend anti-discrimination guidelines to rented accommodation too.