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‘Developers may have issues with the bill but few dispute that buyers get a raw deal’

The Union Cabinet approved the bill for setting up a real estate regulator and the government aims to introduce it in Parliament in the Monsoon Session. Union housing and urban poverty alleviation minister Ajay Maken in an interview to The Indian Express,says the bill gives a lot of flexibility to the state governments while ensuring an effective regulatory regime. Excerpts:The Cabinet has finally approved the long-awaited legislation setting up a real estate regulator.The work on the bill started during my earlier stint as minister of state in the same department in 2006. And then it has been appearing in the press ever since. The point is that it was long pending but a progressive bill.What led to the delay—the developers’ lobby?No,it is not only builders. A lot of updation has taken place because land being a state subject it was necessary for them to come on board. Finally in 2012 with the modifications like the states too can have their own legislation,22 states gave us their support. Except for some states like Chhattisgarh,others were on board. Other BJP-ruled states like Madhya Pradesh and Gujarat are with us. Equally,we had strong opposition from developers,though some of them welcomed it. The good developers were clear the bill will give them a chance to redress the balance with the bad ones. Now,the bad ones have a better playing field,which we aim to change.You will be surprised that in the National Capital Region (NCR),builders give only the bayana (advance payment) to farmers and then launch the project. With the cash they build up,they then start buying the land and move to obtain all statutory clearances,despite promising the home buyers the house will be ready in say two years.How do you seek to resolve conflicts between the land acquisition and real estate regulatory bills on who has the first authority to move when a rural land is bought?The bill provisions should not be equated with the setting up of the Telecom Regulatory Authority of India or the Securities and Exchange Board of India. Here each project will have to be registered afresh with the regulator for launching it for sale. A developer like Unitech or DLF cannot get away with a one time registration. This means you need clear land titles and approvals before launching a project publicly. So you cannot befool a home buyer. There is a fine and then for habitual offenders there is imprisonment.Can the regulator move in even at the pre-launch stage of the project for any violation?No. If someone is building on a piece of land without clearances,so long as he does not raise money from the public,the regulator does not come into the picture. Bringing those provisions in would have been too draconian and intrusive. Our limited purpose is to protect the home buyer.Since there are states like Maharashtra which have already started the process of having a regulation,will there be a Central regulator and state regulators?No. There will be no Central regulator. Earlier on,there was supposed to be a tribunal at the national level in the draft bill. But that has been done away with,and now there will be only tribunals at the state level. These were the issues ironed out in the consultations with the states.From where the appeals will go to the high court and thereon…Yes. It will be serve the builders and home buyers. There will be an adjudicating officer at the first tier,followed by a tribunal and then grievances can be addressed to the high court.Could there be a situation where the regulator/ tribunal of one state can issue directions contrary to that of another state?Within a state,the jurisdiction of the real estate regulatory authority would be supreme.So developers with presence in two or more states,who say have fallen foul of the law in those states cannot take recourse to a direction passed by one state and argue on that basis with another state…No. That is because,clearances are project specific. Suppose the issue is of environmental clearance. In state A the developer may fulfil all conditions pertaining to the environmental clearance,while in state B he might not get clearance based on the same conditions fulfilled in state A as conditions may be different. So,the issues would be specific to the project and the conditions prevailing from state to state.Who would appoint the regulators?The bill spells out the qualifications for those who would be appointed to the regulatory authority. The appointments,however,would be the prerogative of the states.Another issue is of the mandatory 70 per cent to be parked in an escrow account…Earlier,the view was that developers should be mandated to park 70 per cent of the money collected from buyers towards the project in the escrow account. Later,it was felt that at a national level,enforcing such a norm may not be practicable. So we have decided to leave it to the states. They could determine that on a project-specific or a city-wise basis. We have,however,limited that this money that would be parked is only the component towards the construction costs. The government would not like developers to use this sum collected from buyers to be diverted towards the purchase of land. That would not favour the buyer who has bought into that project.Are there specific qualifications for the regulator such as legal background etc?For the tribunal,the condition is that the chairman should have been a judge and the appointment would be done in consultation with the chief justice of the high court. The chairperson of the regulatory authority should be a person of the rank of joint secretary to the state government.What are the provisions for the dispute settlement mechanism? Will the person manning the first tier be of the same seniority as the regulator?Our stipulations on the qualifications are the minimum. I guess it would be a retired officer who has held the office or rank specified,who would be appointed regulator.Would the adjudicator hold the office ex-officio or be seconded?Yes. The officer would be designated specifically for this purpose. It cannot be ex-officio. These would form part of the rules that would be worked out after the law is enacted. We will ensure that the rules regarding appointment of officials would be transparent and neutral.Have you fixed a timeline for the introduction of the bill?We hope to introduce it in the Monsoon Session of Parliament. Once introduced,it will go to the Standing Committee. Once enacted,the authorities and tribunals would have to be set up within one year.How are the developers reacting to the bill?A section of developers have welcomed the bill as they see that they would get a level playing field. Other developers are apprehensive of the pro-forma agreement that forms a part of the bill. All developer-buyer agreements would have to be on the lines of this pro-forma agreement. Today,the agreements are completely asymmetric,loaded in favour of the developer. Not all developers agree with the mechanism,but very few dispute that the buyer is being given a raw deal.

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