Even as the UPA government at the Centre, led by the Congress, is struggling to bring the Real Estate Regulatory Bill into reality, its counterpart in Haryana has surprised everyone with the proposal to introduce a state-specific Real Estate Regulatory Bill, to regulate and clean-up the booming real estate sector. The timing of the proposed Bill, and the speed with which the Hooda government has built the momentum around the proposed regulatory body, has stumped even the most astute observers. Questions are also being raised as to why a government, which until now has failed to rein in the builders, wants to clean the Augean stables, implement the rule of law, and ensure a balanced playing field. It has left many wondering why Chief Minister Hooda has suddenly embarked upon the gargantuan task of regulating an industry which till now has been able to bend almost any policy and person according to its will. The Haryana government itself has been mired in a number of real estate deals, most of which have origins in Gurgaon, and is on the last leg of the current tenure. While critics observe that the proposed body is another attempt to confuse the stakeholders, there are others who support it in the hope that it will bring in more transparency and accountability into
The City residents meanwhile want to know whether the regulatory authority will ensure the timely completion of projects, the launch of new projects on land that has clear title, balanced builder-buyer agreements, builders handing over control of the condominiums to the RWAs on time – and many more things that are stipulated in the LC-IV Agreement, Haryana Apartment Owners Act 1983, and Haryana Urban Development of Land Act 1975. Lately, thousands of disgruntled home buyers in the City have been forced to come out on the streets, to ensure that the builders and authorities listen to their woes and are taken to task. Colonel B.K Dhawan, President Emeritus of the Silver Oaks RWA, is of the opinion that there is no need for the government to come up with a new Act, as the State already has enough laws to regulate this sector. “This proposed Authority will further confuse matters; it is merely an eyewash. The government has failed to implement the Haryana Apartment Owners Act 1983 in letter and spirit. The TCP department is responsible for the mess in Gurgaon, and other areas of the State, as it has not effectively implemented the rules and regulations,” asserts Dhawan. He further contends that almost everything that is being proposed under the new Authority is already covered by the existing rules. A new rule book will only confuse.
The views held by Dhawan seem to represent the mindset of an average Gurgaonite, who has seen the slide of the City, as builder after builder has taken the residents for a ride. Perhaps the recent incidents, in which buyers have collectively revolted against the might of the developers in the case of World Spa, and more recently in Orchid Petals, has also influenced the government’s decision to bring in the regulator. The decision by a group of buyers to approach the Competition Commission against DLF, for abusing its dominance in the market—which led to a Rs. 630 crores penalty award—could also be one of the reasons that led to a move towards an independent regulator, aver industry watchers.
While the intention of the government may be right, S.C Talwar, a resident of Ambience Island, says that when builders can co-opt the highest powers in the State, and even force the DTCP to become a mute spectator, how would the new regulator change things? “Who will implement the rules? We can either empower the DTCP with more effective and professional employees who can regulate the industry, or disband it in favour of the proposed new body. We already have HUDA, DTCP and MCG – what more can be achieved when the officials themselves do not want
to implement the rules?”
Given the failure of the Haryana Regulation of Property Dealers and Consultants Act, which was touted as the panacea for curbing illegal activities of brokers, many buyers who have had bad experiences assert that nothing much will change in the system. Sanjay Sharma of Qubrex says that this proposed Bill might bring more transparency into the system – as it provides for the creation of a website for logging of data and information – but bringing in accountability will be a far cry. “Another important issue is that the regulator must ensure that it does not become a choke point for complaints. Clever operators can clog the system with fake complaints, thereby ensuring that its working is hampered,” he says. An interesting point raised by Sharma is of how the government plans to ensure that builders do not make profits beyond the 15 per cent, as stipulated in law. Also, how would the existing rules and regulations be brought in synergy with the proposed powers of the authority?
While buyers and real estate activists are not much enthused by the proposed Bill, some associations think different. Dr. P.S.N Rao, Founder and Chairman, National Association of Realtors-India, says that this Bill will provide more transparency and accountability, since a lot of vital information about the projects will be available easily in the public domain, and accessible to prospective buyers, before they make the purchase decision. He further says that the laws on real estate are inadequate in India. “We need this Real Estate Regulatory law so that the business can be regulated for the benefit of the consumers. There is no protection for the consumers today, and existing provisions in laws are grossly inadequate to bring the erring builders and developers to book,” he asserts. On the issue of timely completion of projects, and handing over of common areas, Rao says that this Bill makes it an obligation on part of the authorities, as well as the government developers and other agencies, to conform to the rule book.
A number of real estate professionals, who are into the broking business, are also welcoming this Bill, because they think it will bring in more professionalism into the industry. Puneet Verma, Vice President, Remax India, a real estate firm believes that—like insurance—the real estate industry needs an independent regulator. It will make the registration of brokers, builders and projects compulsory. The provision of strict penalties, and a likely chance of including imprisonment as punishment for violating certain sections of the proposed Bill, is also being deemed as quite remarkable. A similar Bill being brought in the Union Law ministry has proposed imprisonment up to three years, or fine up to 10 per cent of the project, in case a builder does not register with the Authority.
A real estate activist involved with consumer advocacy for decades, recalls that the Maharshtra Apartment Owners Act originally had provisions for imprisonment of an errant builder, but later this section was removed. With a large number of consumers approaching the courts over irregularities being committed by the developers, it is understood that the Haryana government, in order to woo the recalcitrant citizenry, has decided to introduce this Bill, he adds. R.S Rathee of the Gurgaon Citizens Council, says that the government should be ready to implement the Bill in letter and spirit – only then will it be successful. “We are studying the details of the proposed Bill,” he says. Verma of Remax firmly believes that once the regulator comes into play, the field will be more clean, as a referee would be overlooking the players constantly. “Real estate is the hottest investment destination, and it needs to be disciplined. This will make the industry more responsible and accountable, and that is the need of the hour,” he says.
Many in the industry feel that the proposed Bill should ensure that the proposed regulator is an overarching body, that guides HUDA, DTCP, HSIIDC, Housing Board and other agencies dealing with real estate development in Haryana. They also want that private builders should be made to follow the rule of law, rather than allowing them to abuse it – which has been happening often till now.
Devinder Gupta, a prominent real estate consultant, and MD of DG Realty, opines that the coming of a regulator will ensure that projects are registered before being sold to buyers. The plans of the project, the titles of the land, the proposed area to be built and sold, will all have to be put on a website before sale takes place – and this will bring in more transparency. “The mid-way change in plans, which often brings the buyers and builders into a clash, would also end, if the authority comes into place and plays a real role,” he adds. But Gupta also says that many buyers also do not adhere to the agreements – which is also going to be penalized as per this Bill.
For him and many others, this Bill is fairly balanced, and will help in the opening up the industry, provided the government has the political will and intention to clean up realty. However, sceptics argue that this Bill is another tool for the government to arm twist the builders, as cash will soon be required to fund the oncoming costly elections. Having not much faith in local governance and political promises, the residents of the Millennium City are keeping their
fingers crossed, as they
know that their fate is going to be decided by another piece of legislation – which will either bring them salvation, or make it even more difficult to attain the real estate Nirvana.
The Town & Country Planning Dept (TCP) has proposed the Haryana Real Estate (Regulation and Development) Bill 2013 (see tcpharyana.gov.in), for ensuring transparency in property/real estate transactions, and also for helping regulate and develop the real estate sector. All projects, promoters and real estate agents would need to be registered with HRERA, for a fee. Among many points in the Bill, funds received from customers would need to be securely and separately banked by the builders. It promises the setting up of a Haryana Real Estate Regulatory Authority (HRERA) within 1 year of the passing of the Act. There would also be an Appellate Tribunal for adjudication of disputes, and for taking up appeals against the Authority’s decisions.
The Act would not apply to properties with less than 1000 sq.m. land, or projects with less than 12 apartments. Also exempted would be properties where Occupation and Completion Certificates have already been issued before the Act comes into force.