The Rajya Sabha has passed the much anticipated Real Estate Bill, overcoming the sharp political rivalries that have stalled a lot of legislative activity in the House. In the course of five years, the Bill went through several rounds of discussions and numerous changes were made to its original text before it passed muster. Once enacted, it would finally give homebuyers enough confidence to be less inhibited by the “buyer beware” caution in a sector largely known for honouring the terms of deals mostly in the breach. An industry estimate suggests that about 10 lakh buyers invest every year in a house. According to Minister of Housing and Urban Poverty Alleviation M. Venkaiah Naidu, a total of 76,044 companies are involved in the real estate sector. It is estimated to contribute about 9 per cent of GDP (gross domestic product). He told the House that a total of 17,526 projects were launched between 2011 and 2015 with an investment value of Rs.13.70 lakh crore. The sheer scale of these numbers demands that this sector be run on transparent lines, taking into consideration both the need to foster fair play and encourage equity. Given the deep political divide in Parliament, it is encouraging to see that parties have risen above narrow considerations to let this important pro-consumer legislation go through.
Beyond just being a disciplinary legislation that regulates the haphazard functioning and the presence of unscrupulous operators in the real-estate business, the Bill will also bring in a sense of comfort and feeling of security to homebuyers. Compulsory registration of any project of the size of 500 square metres in size or involves eight apartments, a separate escrow account to park collections, greater clarity in the definition of carpet area, a tighter penalty norm for structural defects in construction, a mandatory consent clause for changes in construction plans and other such provisions will go a long way in boosting consumer confidence. Read in tandem with the stringent disclosure norms and penalty provisions, including imprisonment, in some cases, for delays and other contractual failures on the part of a builder, this legislation is a necessary and desirable means to clean up the real estate sector. It is hoped that the legislation will improve the trust quotient, which has been identified as a key factor hurting the credibility of the sector that serves the role of a multiplier in a growing economy. If that happens, it would go a long way in strengthening the overall demand sentiment. A better regulatory environment could also inject a sense of clarity in the operation of the industry, and facilitate prospective investors to look at it as a huge opportunity. It is important to note that the Central legislation has to be implemented by the States. The responsibility of providing the enabling ecosystem rests with them. The proof of the pudding will lie in the manner the States implement the legislation.
