What are the pros and cons of real estate bill becoming a realty?

Yesh

Yesh

New Member
What are the pros and cons of real estate bill becoming a realty?
 
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nmb

Well-Known Member
The main benefits will be a better regulatory framework and more protection for investors. The Bill may impact property development levels in the short to medium term as the market reacts to the changes but eventually it will reduce the number of rogue property developers who have little respect for investor protection.
 
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Ritu Mehta

New Member
The good news is that the Bill has closed the window for comments and may be presented in Parliament. The bad news is that it has some contentious issues, which, according to developers, will affect the buyer.


Issue: It bans advertisements or brochures inviting advances or deposits.

What it means for consumers: This will reduce chances of fraud but also leave buyers in the dark about new projects.

What it means for developers: Unable to garner eyeballs for their projects, they could witness a decline in the pre-launch sales.

Issue: Mandatory registration before starting a new project.

What it means for consumers: False claims will be fewer as developers will have to submit details prior to the launch. But the clause that developers have to submit a bank guarantee of 5 per cent of the estimated cost, may push up realty prices.

What it means for developers: Renewing a license procedure can lead to corruption and red-tapism.

Issue: No advances can be taken without signing a sales agreement.

What it means for consumers: It will prevent any discrepancies cropping up at a later date. It may also discourage investor-buyers from fuelling price speculation because the stamp duty cost will reduce returns by 5–14 per cent.

What it means for developers: Investors are likely to stay away from realty projects due to potentially lower returns.

Regulator watch:A look at the recent rulings which can affect you

Markets

  • Sebi has forbidden AMCs from demanding a no-objection certificate from investors wishing to change their mutual fund distributors or opting to go direct. Though the instruction has been in place for a while, some AMCs were flouting it.
  • By 31 March 2010, dealings between stock brokers and investors will become more transparent. As per Sebi's new guidelines, a broker has to offer a folder/book listing the documents, mandatory and otherwise, required for registering a customer, which has to be signed by the latter. The settlement of funds has to be done within 24 hours of the payout, unless the client specifically authorises the broker to maintain a running account, to be renewed at least once a year. The authorisation can be revoked any time by the client.
Banking

  • To smoothen e-payment, the RBI says banks should settle all electronic payments to retailers/service providers within three days. The payments involving nodal banks must be effected within four days.
  • The apex bank has said that anyone seeking credit from any financial institution can request for a copy of his credit report. The institution can charge a maximum of Rs 50 for this facility.
Pensions

The Swarup committee has submitted its final recommendations to the government. Despite vehement opposition, the committee suggests zero entry loads for insurance products. The report will be forwarded to the high-level coordination committee of regulators, which will decide if, and how, the recommendations are to be implemented.

Markets

The Telecom Regulatory Authority of India has fixed Rs 19 as the ceiling for the porting charge for mobile number portability. This amount has to be paid by the subscriber to the recipient operator.
 
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nmb

Well-Known Member
There is no doubt that the new Bill will help to make the Indian property market more transparent but whether the government has gone too far remains to be seen. Anything which reduces competition for Indian real estate will likely reduce the price and reduce the potential returns. However, these factors should be considered alongside the overall benefits of making the whole situation more transparent and offering greater protection for both investors and developers.
 
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