Housing bill one-sided, ignores builder grievances, says MCHI

The Maharashtra Housing Regulation and Development Bill 2012 is aimed at protecting the buyer of a property, bringing in a higher degree of transparency in the sector and providing institutional redressal mechanisms for complaints and buyer grievances.

In the absence of a controlling agency, there are no enforceable commitments regarding the size of the units, building specifications, amenities and facilities, etc. Even other aspects like hidden charges, delays in construction and delivery of the unit cannot be controlled, said Arvind Nandan - Executive Director, Consulting, Cushman & Wakefield.

But what does the bill mean for a developer? Does it address the grievances of builders too?

Firstpost spoke to Paras Gundecha, President, Maharashtra Chamber of Housing Industry-CREDAI, the only recognised body of real estate developers in Mumbai, to understand builder grievances and what they feel about the bill.

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Q: How does the bill prove to be a game changer for the industry?

A: The Real Estate Regulatory Bill is a definite game changer. It will lead to transparency. It is a good beginning, but our strong feeling is that it is a just one-sided effort. The Bill seeks to punish errant developers delaying possessions and other so-called irregularities. But the Bill is totally silent on the authorities and government officials who could be responsible for delaying projects by sitting on approvals. For instance, during the last 18 months hardly any building plans were cleared in Mumbai, the capital of real estate. It is only now that after much hue and cry plans are being cleared.

[caption id=“attachment_385572” align=“alignleft” width=“380”]  In the absence of a controlling agency, there are no enforceable commitments regarding the size of the units, building specifications, amenities and facilities, etc.[/caption]

Similarly, the Bill does not talk about defaulting customers. Delays in making payments as per the schedule given in agreements severely hampers the project work. A customer is free to move court or the regulator if he or she feels aggrieved. But what about the developer? We are also serious business professionals, but sadly the bill does not take care of our issues.

Developers cannot make alterations or additions in plans without the consent of the buyer. What does this mean for the buyer? And what does this mean in terms of FSI rules

Any building has to be within the parameters of FSI ( floor space index) rules. We cannot cross this Laxman Rekha. I agree that plans and alterations must be done by taking the buyers into confidence if the changes impact the square feet areas promised.

Now that builders cannot pre-sell apartments without the regulatory approval of the regulator, will apartments stop being treated as tradable instruments? What does this mean for investors and speculation in realty?

This measure is again one-sided. On one hand developers are not allowed the facility of affordable project finance by banks while on the other we are not supposed pre-sell. What a dichotomy!

The Reserve Bank also treats real estate developers with a lot of negativity. You cannot expect us to build affordable houses and make decent margins without allowing us finance at reasonable rates of interest. Home buyers get loans at 10- 12 percent, whereas we are charged 16-8 percent, plus other fees like processing, etc.

It is high time the RBI and government takes a realistic view of the realty business. Right to shelter is our constitutional right!

One of the big changes introduced is that the developer will now have a defect liability period of five years. What is your view on this?

Prima Facie it again appears to be harsh on developers. Let me explain. None of the inputs, like steel, cement, sand, erratic labour cost, are regulated. They are open to market vagaries. High cost of inputs may at times force some developers to go for cheaper material like sea sand instead of river sand and buildings could develop problems. Here our suggestion is to regulate everything that goes into buildings, set up standards by experts like IIT engineers or building research institute or even import global standards. But before taking such drastic steps, we must ensure a conducive atmosphere for developers to lead a worry-free business.

Why does the sector need a regulatory authority?

A Regulatory Bill is important to ensure transparency in all deals - be it between developers and customers or the authorities and developers. It should be on the lines of Sebi, encompassing all, and not one-sided, as proposed by the government.