Friday, June 21, 2013

"REAL ESTATE REGULATORY BILL" , MAGIC WAND FOR REAL ESTATE?











Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws” ...Plato

Recently when I read the news about "The real estate regulation & development" bill for real estate, I remembered this quote by the great thinker. As many people asked my reaction about the news, even my parents who are teachers by profession & are always curious about what their builder son does in his business also showed the news to me. And they asked me " Is this going to make your professions image clean?", well I don’t know what this bill is going to do about the image of real estate or can it really regulate the shady profession but one thing is sure if we accept the truth in Plato's quote then it’s just one more vein effort by the Govt to make their own image clean in eyes of common man.

With nearly 70% of the political leaders in Metros involved by themselves or through their close relatives in real estate business, I always wonder whether real stringent laws can be made for this line & if made whether they will be implemented by the authorities? Because if you go through the content of the bill no doubt purpose is to check the illegal attitude of the developers but then the same has been in many of the present laws right from MRTP i.e. Maharashtra Regional town Planning Act to MOFA i.e. Maharashtra Ownership Flat Act. Agreed some modifications were necessary with the time but already there are so many regulatory authorities right from Municipal Corporations to Collector to town Planning, Urban Development Department & what not! Rather real estate is like child with many parents but no one taking full responsibility of the same! Because with so many authorities & acts in place yet each day we read about new scandal in real estate, may it be recent headlines of Shindewadi or a wall falling or may it be Thane building collapse, the basic problem remains.

As I have repeatedly mentioned that it’s not just a single builder's attitude towards his building but its attitude of the entire system towards the problem which is the main crux. Adding one more authority may be good for the Govt for making their own image a bit shining as to show they have done something for the common man & his problems towards housing but what about lacuna in strengthening the existing system? I will ask who has stopped them from doing that. As time & again bosses of the so called departments who are supposed to curb illegal tendencies in real estate have cried that they lack man power, funds to stop illegal trade practices in the industry & Govt has turned blind eye about the same is fact. Each time some wrong thing happen & the temporary bandage is being done but the main wound is spreading like a gangrene in entire society, what about that?

Why are we waiting for this regulatory bill to come in existence of which journey has just started. Knowing the speed with which our systems work it will be going to become one more hurdle in already NOC laden real estate industry is what I feel. Right now itself if a projects has to be started there are more than 30 different NOC's to be obtained from various regulatory bodies of Govt departments & it’s hell time consuming , making the end product extremely costly. Things like TDR generation are being done on snail's pace & all this is indirectly helping making the homes more costly & builders are being blamed for making the houses unaffordable which may be true in some way but isn’t it duty of Govt to check the way present system going on? Who are the so called builders after all? Like any other business community they too are doing their business by facing rather coping up with the current system. I am not saying all builders are saints or with morals but where you know you can get away by being immoral then why blame people for being so? It’s the system which allows them to get away & that system needs to be improvised not just making one more law about the same is going to help it.

And how many good developers opinion has been taken in drafting the so called regulatory bill? As if looked at some of the provisions in the bill then no sane developer will remain in business is fact. See this provision under the bill by which the developer has to spend 70% amount of the project sales on the same project! How this can be maintained especially when on one firms name number of projects are going on, how we can differentiate the accounting? Another thing is indirectly Govt is suggesting the gross profit per project should not be more than 30% but this is assumption that there will be profit, what about if there is downfall in market & the developer has to spend from his pocket then is the Govt going to take responsibility of the loss? No law can be made by considering every person is a criminal & unfortunately this particular bill has the tone saying all developers are criminal!

Many of the provisions says arrest of the developer even life imprisonment for violation of the conditions in contract with the flat holder but who is going to decide the violation & in what time? At each district level regulatory bodies will be formed in front of which any dispute between the client & the developer is supposed to go for judgment but when these bodies will be in operation & what like present man power limitation continues yet the act comes in existence? What the builders enrolled under the regulatory body will do? Classic example is Environment Clearance Certificate which is mandatory for projects over 2 lacs sq ft area; Here for nearly 4 years for entire Maharashtra there was just one clearing committee making the time required for this NOC popularly known as EC more than a year. That too just to start the project as without EC you can’t get commencement certificate from the local governing body. Means you buy the land with full payment upfront as  Govt don’t have the sanctioning system in place you wait for over one year just to launch your project! In such case is the Govt ready to take the responsibility of delays as well losses occurred by the same? And if anybody wants to challenge the decision by regulatory body at district level then he or she will have to go to Delhi for appeal, how many can afford that cost & time involved in the process? Also the Appellate Tribunal should have been given judicial authority or powers, which hasn’t been done, so what if any of the part goes to court? And what about all existing laws like MOFA?

And why this whole bill is needed to push forward now only? We amend something only when the existing systems fails even after utilizing the same at fullest level, but in this case has the systems being utilized at fullest? Rather even 10% utilization of present system has not been done. And this even a toddler in real estate business will tell. As every concerned department is short of man power & machinery & those who are in place, don’t use their authorities in time, reasons may be any. Sometimes it pressure from people in power or some times its wasted interests or sometimes it’s just negligence, so what guaranty that the same story won’t repeat? As the law may be new & the punishments more stringent but the same system & same people are there to implement this new law, what about them? Unless we don’t ask these questions & get the right answers till then it will be just another table to tackle for the developers who are bad. And one more hurdle in making better product for the good developers. No one will disagree about the present scenario in real estate & agreed the end user is least protected in compare with other industries but then who has stopped Govt to use the sword with present laws & provisions to punish the criminal mentality in real estate? How many responsible personnel’s may it be developers may it be officials has been punished under the present acts & provisions for the same? We all know the number toll & does it mean the present acts were so weak that no punishment was possible under the same for all the mishaps happened in real estate till now!

Doesn't the fault of being cheated by the developer lies somewhat with ignorant customers also, who books the flat without confirming the pedigree of the developer & just to save some rupees goes with a cheater attitude firm! The provision of mentioning carpet area of the flat is applicable even right now also under MOFA but then if the developer isn’t mentioning the same, then why the customer books flat with such developer? My experience is not even 5% of the customers study’s the agreement draft & even lesser who studies the draft asks questions about the provisions in the same. People behave in "penny like pound foolish" manner when their own home is at deal. There are licensed architects, structural engineers in market, no one demands the developer sanctioned plans or structural drawings & get them examined from these professions, just to save few rupees you are ready to make your entire life time investment at stake!

Remember no law or bill can get rid of criminals in any trade; it’s our own attitude towards such tendencies which is going to make the difference. As the wise man Plato has said, with whom we shake our hands will decide our faith, mind it! Till then we have to rely on things like regulatory bill is the sad part of our society!
--
Sanjay Deshpande

Sanjeevani Dev.

MSEDCL (Power) Committee, Credai, Pune

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