CREDAI Expresses Concerns Over MHUPA's New Real Estate Bill
CREDAI has voiced strong disapproval of the Ministry of Housing and Urban Poverty Alleviation's (MHUPA) new Real Estate Bill. CREDAI officials argue that the bill, while broadly accepted by real estate developers, will ultimately encourage corruption.
The Confederation of Real Estate Developers’ Associations of India (CREDAI) boasts a membership of nearly 8,800 developers, representing 20 states and encompassing 114 city divisions across India.
Sources suggest the new Real Estate Bill will be introduced during the current winter session of Parliament and is expected to be approved.
Bill Fosters Corruption, Claims CREDAI Chief
Addressing the new Real Estate Regulatory Bill, CREDAI’s National President, Mr. Lalit Kumar Jain, asserted that the bill falls short of effectively curbing corruption and, paradoxically, will exacerbate it. “The far-reaching powers to be conferred with the regulatory authority, can cause more corruption,” Mr. Jain stated. He further expressed apprehension that the bill might be susceptible to political influence, potentially amplifying corruption.
Concerns Regarding Affordable Housing and Project Delays
Mr. Jain also contended that the Regulatory Bill will hinder the development of affordable housing. The bill empowers the regulator to approve or reject project registrations, a process Mr. Jain believes, despite aiming for manual registrations, will not yield the desired results. Furthermore, the regulator’s power to revoke registrations could burden homebuyers with additional costs passed on by developers. “The regulator has even the power to cancel the registrations,” Mr. Jain alleged. “This will increase the burden of home-buyers as they will be charged the extra-amount the Real Estate Developers are forced to pay to the authority.” Mr. Jain suggested that including a dedicated chapter on real estate, authorized by the regulatory authority, could enhance consumer protection.
Mr. Jain stressed the need for a regulator that facilitates swift project clearances. He emphasized that the current protracted approval processes by planning authorities pose significant challenges for real estate developers. “The real estate developers wish to have such a regulator who assures speedy clearance,” he explained. “The regulator has to ensure that the launch of projects is not delayed by any reason. Planning Authority causes great trouble to the real estate developers by taking comparatively longer times for approvals.”
Ineffective Penalization and Financial Strain on Developers
According to Mr. Jain, provisions to penalize developers under the Code of Criminal Procedure will prove ineffective since economic offenses typically do not invoke criminal proceedings. “The provisions to penalize developers under code of criminal procedure also will remain ineffective as economic crimes do not summon any criminal procedure,” Mr Jain clarified.
The bill mandates that real estate developers deposit 70% of the total sale value, a requirement that Mr. Jain warns could severely restrict developers’ capacity for business expansion. He also cautioned that this could lead to a decline in the real estate sector and deter investors, discouraging new entrepreneurs from entering the market. “Regulatory Bill demands the Real Estate Developers to deposit 70% of the total sale value,” Jain stated. “If the developers are to deposit such a large portion of amount then the builders will remain incapable of any business expansion. This will destroy the real estate sector as well.” He concluded by expressing concerns that this may discourage investment and new entrepreneurial ventures within the sector.