The Rajya Sabha has passed the much-awaited Real Estate Regulation and Development Bill, which seeks to protect home buyers against erring developers besides bringing transparency in the sector. Bloomberg TV India caught up with DLF CEO Rajeev Talwar.

Does the Real Estate Bill make the rules consumer-centric and clear up a lot of anomalies that have existed so far?

Yes. India has been going through the major process of revival of the economy, which we believe is the right way for the construction, real estate and housing sectors. First it was the FDI reforms, which were announced in December 2015. Next came the Budget with big moves on affordable housing, rental payments and repayment of loans taken for housing.

The next was rentals up to ₹60,000 a year and the most important for us — which was for foreign institutional inflows — was the DDTs been done away with for RIETs.

Now, we have a major reform which has been announced and undertaken by the government yesterday — the Real Estate Regulation Bill. All investors, especially those abroad, look at the institutional framework that exists in the country before putting in big money. The real estate regulator, which is coming in and could be set up in all States and all major cities, I think, is the next big reform.

We are extremely happy with this. We respect the judgment of the Parliament and the wisdom of the Parliamentarians. The law they have enacted is extremely important for consumer confidence while buying houses because this industry is mainly financed by consumer inflows. So, we are quite happy that there will be some amendments we could probably expect to take place in due course of time, like all laws in India. The industry has been making very good buyers agreements. Therefore, making disclosures should not be an impediment to the industry.

But now there is a legal framework under which disclosures need to be made public and that will go a long way making this industry transparent and accountable, instilling confidence among buyers.

While it is fantastic news for consumers, what does it mean for developers, particularly at a time when the real estate sector is going through financial stress?

I think it suits the media to say — look, here somewhere there must be some bad news for developers in this.

What is the bad news? If consumer confidence and buyer confidence goes up, they buy more houses. That should be great news for developers. If they are made to put 70 per cent of the funds in an escrow account, up from 30 per cent, which was the rule in many States earlier, that should be good because no money gets diverted. Anyway, the third part — that if this becomes a regulated industry, a more transparent industry, and more FDI inflows and bank finance to buyers become available — it is great news for developers. Developing more housing is the need of the hour in the country. We were waiting for either interest rate to go down or for the government to take steps which they have already taken for possibly a revival of the industry.

It may mean a very positive impact on developers, real estate companies as well as construction companies hopefully. I think the next amendments which will come in — one, this is a civil industry and criminal procedures and imprisonments are not required; and number two, please bring within its ambit all the local bodies and State institutions as well as the government authorities, which perhaps may delay or at least only seemingly at least pay lip services for timely approvals, but actually do not provide approvals on time; and third, get construction companies within the ambit of the rule. Real estate agents have been included but the construction companies whether small or big should be brought under its ambit that they also have a commitment to deliver on time. After all you would know that most real estate companies especially the big ones and the reputed ones and even the mid-sized ones don’t do in house construction. They use some of the best companies available in India and some of the foreign companies which have come into India.

Related Topics
comment COMMENT NOW