With the union cabinet having cleared this week a landmark legislation to set up a long-pending real estate regulator, a crucial and welcome first step towards this end has been taken. Such a regulator is necessary to protect home buyers from unscrupulous developers and builders and its presence is expected to increase transparency and boost confidence in an otherwise opaque industry. Though a regulator for real estate has been necessary for long, and the Bill had been pending before the government for many years, there had been stiff resistance from the real estate industry not keen to be regulated. This had meant a continuation of the crucial gap when it came to a law governing the relationship between a buyer and a real estate company though there are many laws pertaining to construction, such as building codes and bye-laws. With India’s huge housing shortage, and with a gigantic demand for at the very least 24 million houses in the urban sector, this left buyers at the mercy of the developers, unable to procure complete and necessary information or even to enforce accountability. Real estate companies have not hesitated to misuse their dominant position to indulge in all manner of violations, including delays in the execution of projects. The new Bill is set to bring about changes in this relationship, and once it is cleared by Parliament, the centre will be empowered to set up a Real Estate Regulatory Authority, as will the states, which will implement a set of standards, to be recommended by a central advisory council, in areas such as property measurement, builder-buyer agreements and brokerage standards.
The proposed regulator will introduce good practices into the system and erase the malpractices that have crept in even as it settles disputes between real-estate developers and consumers, and ensures greater accountability and disclosures by developers. Consumers will benefit from the authentication of the credentials of developers as they will from the fast tracking of complaints, while builders will now be forced to focus funds for the projects for which they have been collected. Though the presence of the regulator is a boon for consumers, it should also work to the advantage of developers. With the industry now poised for greater transparency and better corporate governance, this should translate into confident purchases by consumers.