Muninder Seeru is managing director of G:Corp Developers Pvt Ltd, which has a range oflarge projects and over 3 million square feet of residential, commercial and retail in India to its credit. As someone with over 23 years' experience in the real estate Industry and expertise in complex deal structuring, he uses his unique vantage point to analyse India's new Real Estate Bill for 'India Investment Journal'.
What would you classify as the highlights of the Real Estate Bill
The highlights of the Real Estate Bill 2016:
- The creation of the Real Estate Regulatory Authority (RERA): This Regulator/ Authority shall have by far the most far reaching impact on the Indian real estate scenario for all times to come, the registration of a development with the regulator makes it difficult for any developer to defraud customers because of the information that has to be put up and submitted and enables the customers to take calls based on actual facts.
- Bringing in Transparency and Disclosures into this Business: Real Estate in our country has always been seen with suspicion because of a variety of reasons. The RE Bill of March 2016 brings in high standards of disclosures and transparency in terms of the developmental approvals, title, financial health etc into the open so that there are no surprises for stakeholders in the development. This is of immense benefit to the consumers.
- The Imposition of Penalties and Revocation of the Developer's registration: We are all aware for any law to be effective there have to be stringent punishments so that it deters people from such actions. The RE Bill has taken care of this aspect quite well by the imposition of very heavy penalties on the promoters including fines and jail terms. This shall go a long way to protect buyers' rights.
- Sale of Units by Carpet Area: This Bill makes it mandatory for a developer to sell and charge the rates based on the carpet Area (This is defined in detail in the notification) of an apartment/unit. India being a large country, every city has its own way of calculating the Super Built-up Area (SBA), and many developers just go by their whims and fancies and load fancy areas to arrive at the SBA, though the Developer community has a well-defined formulas on how to work out the SBA. This shall enable an apple to apple comparison for the home buyer and help them in making their choice.
- Defects Liability Period (DLP) of 5 Years: A customer can now have the developer, rectify defects that are serious in nature (Though, this can be subjective, and not objective) even until five years from the date that he has taken possession of the property. This is in sharp contrast to what happens today to a hapless home buyer because of some unscrupulous developers in distant suburbs or Tier II cities.
- Restriction on the Developer to Assign rights: This clause in the RE Bill restricts the Developers from assigning or transferring their rights. This is to protect customers who purchased homes/ apartments based on the brand identity of a certain Developer. In such situations where a developer may have malafide intentions, this clause puts the brakes on the same and protects the consumer!
Is it friendly towards developers like yourself
The intent of this bill is to safeguard the rights of the buyer and we feel that it shall meet that requirement quite well. However, by default many developers like us, who practise transparency and ethics in their business, shall indirectly benefit as the buyer shall find it easier to do business with such developers. This is in fact going to help the real estate industry mature with time as the industry as a whole understands the intent of the bill.
Would it help instil buyer confidence in the market
This bill shall definitely help the real estate sector in the long run though, there might be a little bit of pain in the short term. Buyers have suffered earlier at the hands of fly by night developers and lost lifetime savings in some rare cases. This bill empowers the home buyer and gives him or her the confidence to make the right choice.
This is a move in the right direction but the government of the day or future has to enable it for the developer community as well and make it easier for developers to buy land, get timely approvals and ensure enforcement of the law of the land and not the jungle.
What more could/needs to be done to stabilise the sector
Some steps that can be taken to stabilise the real estate sector:
i. Online Approvals to completely eliminate the human interference and corruption.
ii. Home loans at 6-7 per cent interest rates.
iii. Hold the approving authority/bureaucrats accountable for any delays that are attributable to them.
These factors shall go a long way in helping this industry perform in terms of timelines and budgets. At this point of time there are too many loose ends and imponderables and the odds are stacked up heavily against the real estate industry. The need is to have major land and labour reforms for it to prosper and mature as an industry and it not to be vilified because of a few rotten apples.
What is the central ethos of your firm, across residential and retail
We at G:Corp strongly believe in maintaining a strong culture of ethics and strive to conduct our business professionally and honestly to the best of our abilities. As a company we have two fundamental drivers that keep us motivated and going as an entity:
a) We are driven by integrity in all our business dealings.
b) We strive towards maintaining transparency with all our stakeholders.
