The Draft Real Estate (Regulation & Development) Bill, 2011 seeks to establish a regulatory oversight mechanism to enforce disclosure, fair practice and accountability norms in the real estate sector, and to provide adjudication machinery for speedy dispute redressal.

Three key concerns

The Draft Real Estate (Regulation & Development) Bill, 2011 seeks to establish a regulatory oversight mechanism to enforce disclosure, fair practice and accountability norms in the real estate sector, and to provide adjudication machinery for speedy dispute redressal. There are several concerns regarding the same.

Real Estate Authority: The Draft Real Estate (Regulation and Development) Bill seeks to set up a Real Estate Authority (hereinafter "the Regulatory Authority") along with a Real Estate Appellate Tribunal (hereinafter "the Appellate Tribunal") collectively referred to as ("the Authorities"); through individual state governments to regulate, control and to promote development, sale, transfer and management of properties. It has been brought forth to bring transparency and to safeguard consumer interest and to facilitate speeding up the construction and maintenance of properties. The Real Estate Regulatory Authority is vested with powers to conduct investigations, inspect books of account, call for information in relation to affairs of the promoters and to issue directions in further of the aforementioned powers. To requisition, summon and enforce the attendance of any person and examining him on oath; requiring discovery and production of documents and receiving evidence on affidavits under the Code of Civil Procedure and to impose and recover penalty imposed on a person on his failure to pay for it. Concern: The regulatory authority requires funds to operate, the onus on it to be a state body intends no external participation, which may increase public expenditure and that expense quantum will have to be borne by the industry through registration fees, etc. This in turn may increase pricing of real assets which is transferred to the end buyer.

Promoter Registration: The Real Estate Bill provides for compulsory registration in cases where the area of land proposed to be developed exceeds four thousand square meters. Further, besides submitting prescribed form, the promoter has to furnish a bank guarantee equal to 5% of the estimated cost of the development works to the Authority which may either be the local authority or any authority vested with the powers to give permission for development or construction on that land. Concern: Developers and industry bodies such as CREDAI, have put up their opposition to any type of licensing / registration as this may become the breeding ground of corruption. They have also welcomed online registration of projects without human involvement.

Challenges that have not been covered include: (a) Improper land titles and off-the record transfers from the past through power of attorney sales
(b) Standardization of technical specification and measurement units for bringing uniformity to super and carpet areas of units
(c) If the penalty provision is enough to make promoters comply with the provisions of the Real Estate Bill