Time for a realty regulator?

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But, many developersare against it, arguing that they may be targeted, and that the regulator wouldonly add to red tape. Namrata Kohli gets diverse opinions on this issue     Are you a victimof delayed project by developers? Where do you turn to? Do you think there is aneed for a real estate regulator in India? Developers are wary of this as theyfeel a regulator will be particularly harsh on builders as against otherstakeholders.     Kumar Gera,president of RealEstate Developers ’ Associations of India (CREDAI), voices his skepticism:“There is no harm in having a regulator, provided the objective is to ensurethat all parties responsible for the successful completion of a real estateproject fulfil their respective obligations. The parties I refer to are thedeveloper, the local authority, the service providers, the purchasers, and thefinancing agency. It is only when all these parties do what they are obliged todo that a project will be successful. If any one of them fails, the desiredresult is not achieved. Hence, all responsible parties need regulation underthe same act or bill. If this is not done and only a developer is targeted, thedesired results cannot be achieved and it will be one more bottleneck in thesystem.”     Ashiana’s VishalGupta reiterates this point and says that this will only create another levelof authority leading to more delays, red tapism, and higher cost, which will beultimately counterproductive for end users. He says that by doing this, we arechallenging the competence of existing authorities who regulate real estate atlocal level, as now, every developer needs to get his project plans sanctioned,land use changed, get licence for construction, follow building bylaws, and geta commencement and a completion certificate. He suggests that instead of aregulator, we need a fasttrack consumer redressal court where justice isdispensed, as real estate investment is the single largest investment a personmakes in his lifetime.     Giving anotherperspective, RE/MAX (a global network of brokers) India’s Samir Chopra feelsthat a regulator would help eliminate anomalies in the existing legal systemdue to multiplicity of authorities and procedural complexities. He says thisfederal regulatory body cannot hold responsibilities like providing guidance onpolicy framework, resolution of stakeholders’ concerns, and consumer rights’protection. “Broadly, an independent regulator with clearly set guidelines anddirectives to follow will ensure fair competition and protect the interests of builders, brokers,investors , and above all — consumers. The model regulation could have aquick redressal mechanism for real estate industry, which is often faced with alitany of disputes.”     Some industryinsiders also feel that having a regulator may not solve the problem and thereare enough regulations at present. According to Sharad Jhingan, COO of PvtEquity Fund at Lanco Infratech Ltd, “The real issue is enforcement andenactment of regulations.” He adds that there are several regulations for a lotmany things now, despite which real estate developers have major time and costoverruns in their projects. Besides, they continue to violate norms byindulging in prelaunches or assuring a fixed return on investment, therebyacting more as NBFCs (non-banking financial companies).     Cut to theconsumers, and they badly want someone to lend a voice to their woes when theyare at the receiving end. According to an MNC executive, Manish Khurana, “Wepeople put all our savings into a property, which can turn out to be a big riskin this highly speculative market. It’s high time real estate sector gotorganized and our rights protected.”     Consumers feel aregulator will not only lend a voice to consumers, but also help in creation ofa more transparent market and hold developers accountable. According to AkashKapur, an investor: “When telecom, petroleum and civil aviation industry aredoing well with a regulator – the end user is a beneficiary. Also, it providesa level playing field for market players. It’s high time the real estateindustry is regulated.”     Deepak Parekh,chairman of HDFC, has been very vocal about a regulator. He feels that theregulator’s primary role should be to ensure adequate consumer protection inany case of real estate fraud. Today, the only recourse a consumer has iseither a consumer court or a civil court, both of which can take ages before acase even comes up for hearing. Thus, there is a need for basic consumerprotection for an individual’s largest investment in a physical asset.     Drawing a simpleparallel, Parekh says that a person who sells you a mutual fund product,irrespective of the amount invested, has to be registered with the Associationof Mutual Funds of India and has to clear an advisory module exam. Similarly,insurance agents have to be licensed and go through mandatory training and anexamination under the auspices of IRDA. But when one buys a house, there is noregulator to ensure that the transactions are in order. All that a common manrelies upon is good luck and trust.     A regulator needsto ensure best practices and transparency within the sector. For instance, theregulator can mandate that all apartments be sold only on the basis of carpetarea and not super-builtup area. Further, the real estate regulator can ensurethat projects are completed on time and clear titles are given toconsumers.     The next q u e s ti o n which arises is that since real estate is a state subject, will aregulator have to be set up at the state level. “Admittedly, the logistical cha l l e n g e with setting up a real estate regulator is that it will have tobe done at the state level. Again, at the state level, there will be a need tocoordinate with municipalities and other local bodies. But even if each statehas its own regulator, there should be a national body that will promote bestpractices and oversee the functioning of the state-level real estate re g u lat o r s. Citing a relevant example, he says it happened with electricity. Howdid so many states agree to break transmission, distribution and generationchain? Initially, only one or two states were willing to do the trifurcation,the rest were not. Again, it happened because the Centre promised states fundsunder APDRP (accelerated power development and reforms programme), if they wentthrough the trifurcation. When there is something like that, states comply,because they want cheaper money or they want grants or something. The samemodel as in electricity, where you have the Central Electricity Authority andthen the stateregulators, can be adopted for real estate , ” says Parekh.      Globally, there are many countries where areal estate regulator is working well, like RERA Dubai. Real Estate RegulatoryAgency (RERA) is a subsidiary agency under Dubai Land Department, which is agovernment organization that regulates real estate market and aims to maintaina healthy real estate investment in the emirate of Dubai.     In the US, realestate brokerage services are regulated by state-level real estate commissionsor boards. These boards or commissions are granted broad and exclusiverulemaking and enforcement powers. More than two-thirds of the states in the USdo not have separation of real estate regulation and brokerage services. Thus,most state laws allow or require participation of real estate licensees on realestate commissions and boards. It is now increasingly being felt that there isa need for independent regulation where officials on the board or thecommission must not be practicing brokers or must surrender their licence forthe duration of their public service. The importance of independence stems fromthe fact that because of dominance by brokers and other industry members onthese boards, real estate commissions tend to neglect consumer interests.     In Australia, RealEstate and Business Agents Supervisory Board (REBA) regulates the state’s realestate industry. It is an independent statutory authority established under theReal Estate and Business Agents Act 1978, to regulate people who conduct realestate transactions and other related transactions. The board is the licensingand supervisory authority. It issues licences and certificates of registrationto suitably qualified and experienced people. It supervises industry compliancewith the act and the standards of conduct required under the Code of Conductfor Agents and Sales Representatives. Courtesy times property dtd. 19/02/2010 For more information about real estate, real estate india,Indian real estate, property, property consultant, property in india, Indianproperty, property investment option, investment in real estate Log on to http://www.propertycafeteria.com/ And http://www.zameen-zaidad.com/

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  End users have for long demanded a real estate regulator to safeguard their investment. But, many developers are against it, arguing that they may be targeted,

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