CREDAI states that prices of housing stock can rise to around Rs 300 per square feet with the introduction of the proposed Model Real Estate Act  In a major twist in the tale, the proposed Model Real Estate Act that was conceived as a boon for buyers can eventually impel them to cough up more. Of late, the Confederation of Real Estate Developers’ Association of India (CREDAI) has indicated that prices of housing stock can shoot up to roughly Rs 300 per square feet, with the introduction of the regulatory bill. Quite obviously, the developers would pass on the extra amount to the buyers, making them the ultimate sufferers.
Speaking to reporters recently, CREDAI vice president Prakash Challa termed the proposed regulatory bill ‘draconian’ and said that it aims at jeopardising real estate developers. Soon, the bill is likely to be placed before the Parliament.
While making it clear that CREDAI is not opposed to having a legislation to regulate the evolving property sector, Mr Challa further added that the proposed legislation, if implemented in its present form, can considerably impact the very concept of affordable housing and in turn be detrimental for the whole industry.
Further concerns
Apart from the aforementioned reservations, CREDAI has also expressed concern over delay in commencing realty projects, leave alone completing them.
The reason: As of now, developers need to obtain statutory approvals from the Metropolitan Development Authority of respective states, the Directorate of Town and Country Planning and the Environmental Department (for big projects), however if the bill is introduced then the developer will have to seek another approval from a new regulatory authority, consequently delaying work to a great extent.
CREDAI Tamil Nadu president T Chitty Babu listed out the key factors in the proposed bill, which would eventually lead to project cost escalation. According to Mr Babu, the cost drivers include delay in project commencement, a mandatory requirement for the builder to provide a 5% bank guarantee of the estimated project cost and payment of additional stamp duty.
To view it from a different angle, a TJCD[i] correspondent contacted Pravin Bavadiya, founder and chairman of City Estate Management, a well-known property dealer in Ahmedabad. Surprisingly, Mr Bavadiya presented us a different opinion and said, “The proposed act would bring in transparency and security for buyers and brokers, while making developers much more disciplined.”
CREDAI also lamented that the bill does not mention of any kind of penalty for delay caused by service providers of power, water and sewerage connections as well as of regulatory agencies in giving project approvals. On the contrary, the proposed legislation prescribes imprisonment for the builder if he fails to provide the aforementioned basic amenities on time.
Jeeta Bandopadhyay
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