The onset of the Indian summer this year may have one particular industry sweating more profusely than others even as its customers sigh in relief.
The upper house of Indian parliament, the Rajya Sabha, last week passed a bill that could fundamentally change the way business is done in the real estate sector. The Real Estate (Regulation & Development) Bill, 2015, will now be tabled in the Lok Sabha today (March 14). If it gets through, the proposed law will be sent for presidential assent.
Among other things, the bill envisages a desperately needed industry regulator and imposition of heavy fines on builders for delay in completion of housing projects. Not surprisingly, the news of the Rajya Sabha—where prime minister Narendra Modi-led National Democratic Alliance (NDA) lacks a majority—passing the bill was received warmly on social media, with people thanking both the opposition Congress and Modi’s party, the Bharatiya Janata Party.
Why a regulator?
In the absence of a tough regulator and unwillingness of the average middle class homebuyer to get into lengthy legal battles, most builders have for many years taken hapless customers for a ride. Delayed projects—sometimes by up to six years—and arbitrary changes in layout plans are rampant. So is the manipulation of the ratio between super built-up (stairs, lift, corridors etc.) and carpet areas (net usable area inside the house).
Poor construction quality or deviation from promised quality is common, too.
Builders frequently get away with delayed handing over of possession. This is often done on the sly by inserting important clauses in thick agreement contracts replete with legalese, which apartment buyers rarely bother to read.