The draft real estate regulatory Bill, if passed in its current form, will prove detrimental to the industry and stake-holders, says the Maharashtra Chamber of Housing Industry.
It will be in the interest of all stake-holders that the competent authorities, including corporations and other government authorities, are also made responsible for according time-bound sanctions and permissions, said Mr Paras Gundecha President, MCHI.
The Ministry of Housing and Urban Poverty Alleviation uploaded the draft regulatory bill on its Web site on November 9, 2011 seeking suggestions within 30 days.
“It is the first comprehensive Bill of its nature which affects almost every aspect of the housing industry, starting from and reaching up to managing, sale and delivery of projects in future,” he said.
Some provisions are likely to create practical problems. There is an escrow provision that developers should deposit 70 per cent of the amount realised from customers in a separate bank account. While it may look as if this provision is made to protect the interests of consumers, but in case the project is delayed or the developer was unable to complete work as per schedule as approved by the ‘competent authority', the project will be stalled. Taking this into consideration, he said the escrow provision should cover only construction costs. Other costs, including land costs, should be excluded, he said.
The registration authority was not empowered to accord more than two extensions for project registrations. “In the event that a project is delayed by reasons beyond the control of a developer and the two extensions are through, the fate of the project will be sealed as the second extension would be final,” he said.
The draft Bill has a provision for developers to upload project plans on the regulator's Web site. “Ideally, the competent authority should restrict the exhibition of plans only to the potential consumer or flat purchaser. They have failed to visualize the consequences of misuse by anti-social elements and terrorists.”
Mr Gundecha said the draft required in-depth study and intense interaction between the government and all stakeholders such as promoters, developers, consumers, bankers, consultants, lawyers, architects, engineers and government agencies.
Mr Boman Irani, Secretary, MCHI, said the period of 30 days for responding to the draft Bill was inadequate for the general public or housing industry or any other interested parties, persons or groups.
It will be back to the licence raj and MCHI strongly objects to the Bill as it will hamper the growth of the housing sector and affect the economy, he said.