Monday, July 27, 2009: 12:01:03 PM

TJCD Press Release

Real Estate Regulator Bill hostile to industry

Realty regulatory has proved hostile to the industry and it needs immediate re-evaluation

July 16, 2009, New Delhi : The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has suggested review in Real Estate Regulator Bill in its current shape since many of its provisions are harsher and inimical to industry and concerned stakeholders.
 
“Contrary to expectations, the draft bill does not allow Real Estate Regulator to act as an impartial arbitrator between industry/developer and various government agencies on one hand and the industry/ developer and consumers on the other”.
 
For example, “While the Regulator will lay down and monitor strict timelines for execution of a project (with severe penal implications for the promoter/ developer), it will do nothing to address the inevitable delay and harassment that accompanies various approvals and make there timelines impossible to adhere to”, points out the ASSOCHAM.
 
In a representation addressed to the government, the ASSOCHAM has emphasised that the draft Bill is also discriminatory in as much as it keeps the government agencies/ local authorities/ statutory bodies engaged in the business of development of land or housing out of the ambit of the Regulator. Similarly, while the Bill treats the promoter/ developer in an iniquitous manner, it is biased in favour of the ‘allotee’. In addition the Bill is self contradictory as the Regulator is being given the role of licensing authority as well which is against basic principles of liberalised economy.
 
ASSOCHAM President Sajjan Jindal said, “Section 4 of the Bill has a provision which makes it mandatory for developer to take registration certificate from component authority for release of advertisements to seek buyers for their Real Estate projects. And if advertisement released is without registration certificate, developers are liable to punishment for a term of up to one year or fine Rs 5,000 or both.”
 
According to ASSOCHAM, this is a sweeping provision and is clearly restrictive. The Regulator may have the right to check the veracity of the claims made in an advertisement but giving it a veto power in this regard is a clear violation of the right to conduct business and punishment is too harsh.
 
Likewise, the bill’s Section 5 under head of development of land into colony says that licence for development of colony should be given by competent authority and will be valid for three years and renewable from year to year on payment of prescribed fee. This too is a sweeping power and a recipe for corruption, according to ASSOCHAM. “It reintroduces the licence raj which is an anathema in this post–reform age. The terms too are stringent. The licence is valid only for three years while the various approvals for a project from a slew of government agencies alone take up to 18-24 months. Moreover, land is a state subject and each state authority may have a different set of criteria for granting such licenses.” Therefore the aforesaid Sections need to be diluted as per requirements of industry and consumers.
 
Mr Jindal said, “There are many other provisions in the Bill which require promoters of Real Estate to construct schools, hospitals, community centres and other community building and lay parks in the colony or transfer such land free of cost/ at cost of development. This is again a harsh provision and shows callous disregard for freedom to conduct business and needs modification.
 
Likewise there are many other provisions which need review and therefore the ASSOCHAM urges the government to launch a debate on provisions of existing Regulator Bill so that its harsher sections, sub sections are diluted with a consensus approach to ensure fair play for government, Real Estate developers and buyers of properties and dwelling units, said the ASSOCHAM Chief. 
 
For further information, contact:
 
The Associated Chamber of Commerce and Industry of India

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