The cabinet has recently approved of the Real Estate regulatory bill, which was tabled by a panel two years back. We asked Mr. Tanuj Shori, CEO and co-founder of Square Yards to give his views on the same.
Do you think the bill does justice to the regulation needs of the Real Estate industry in the country?
I don’t think it does. As real estate consultants, our view has always been in favor of a strong Real Estate regulator, in line with global standards. And now the question of “when” rather than “if” India would comply with global best practices, has risen.
For example, in Singapore, every new project needs to go through multiple levels of due diligence checks before it can be launched. To add, the real estate regulatory authority also
purviews and keeps in check the marketing and communication of the developers to shield potential buyers from any miscommunication. In Dubai, Developers can not withdraw funds from the project escrow account unless pre-stipulated construction targets are met. Similar strong regulators exist in most of the global markets such as USA, Canada, Australia etc.
What has been the most disappointing factor in the bill?
Though the cabinet, after a long wait, offered its views and cleared the bill to be tabled in the budget session; however, the cabinet did taper down a lot of strong recommendations such as not checking antecedents of promoters, limited diligence on track record, and most importantly, no blacklisting in the case of 2 prior defaults.
The good provisions in the bill are?
Provisions such as registration of new projects, necessity to keep 50% of amount collected
from consumers in an escrow account, the 2/3rd majority needed to change plan, right to obtain
stage wise time schedule of the project, bringing commercial projects along with residential projects under the umbrella, and fast track tribunals.
What are the things that you feel the bill should include in future?
We also anticipate (and hope) the bill to include significant provisions for the regulation of Real Estate Agents (again, in line with global markets). Globally, real estate agents are supposed to deploy resources for due diligence on projects they wish to market, necessary certifications and training programs, and fiduciary responsibility towards protecting interests of the consumer.
Although the cabinet, for now, has kept secondary market transactions and agents out of the scope of the bill, the inclusion of primary projects should help consolidate the agent market in India. The bigger players should be able to better train, monitor, and regulate their agents from miss-selling on new launches.
