Union Budget 2016: Developers look up to FM for revival

It’s Budget time again, and Indian real estate sector is yet again pinning on the hope of a slew of measures from the government which will see the revival of the struggling sector. 

While most of builders and realty experts believe that measures to improve consumer sentiments through income tax rebates and reduction in borrowing rates can put the life back into the system, others want the government to take long term measures by implementing the much-talked about REITs, Special Residential Zones and Real Estate Mutual Funds (REMFs) to make the real estate more vibrant. Here are the excerpts.

N. Nandakumar, Former President, CREDAI Tamil Nadu & MD,Devinarayan Housing and Property Developments Pvt Ltd.

As the Real Estate Sector has undergone considerable stress over the past couple of years, it is inevitable to announce substantial credible measures in the Union Budget 2016 with a long term view of reviving the Industry.  If the Central Government’s vision “Housing for All” is to be accomplished, the primary factors those influence the affordability needs to be definitely considered.

Few of the key areas that the FM should look into are:

·         - Raising the limit on interest payment towards exemption from tax purview.

·         - Announcing current threshold for principal repayment as part of Income tax deduction.

·         - Debt restructuring for all project loans given to developers without levy of penal interest and additional charges.

·        -  Initiatives that would lead RBI to consider special rate of interest for the category of affordable loans for different cities and metros as against the present uniform home loan policy.

·        -  Review the service tax component and other taxes for affordable home projects together with permitting creation of special residential zones which would cater exclusively to the lower middle income group and middle income group and EWS sectors.

·         - Abolishing import duties on construction equipment which would lead to more automation thereby reducing the project times and cost.

·         - Provide tax incentives for import of technology for rapid construction / cost optimisation.

·         - Reduce the implications of environmental clearances by increasing the threshold from 20,000 sq.m to 150,000 sq.m which would save considerable time and also provide the mandate to the local approving authorities by suitably incorporating norms to be adopted and development regulations of each state’s urban bodies.

Anuj Puri, Chairman & Country Head, JLL India

The real estate sector, which is emerging from a painful and prolonged slowdown, is expecting favourable and growth-stimulating announcements from the government in its forthcoming Union Budget. One of the major issues, property investors and home buyers face, is delay in completion of projects by builders across the country.

The government should offer buyers financial protection from construction delays. The existing provision allows buyers to claim tax benefit upto Rs 2 lakh for under construction property which should be completed within three years. If the completion date extends, the benefits reduce to Rs 30000 and the burden of buyers multiplies as they have to pay EMIs along with the rent for their current accommodation.

Instead of offering them full tax benefits only from post-possession, home buyers should also enjoy the benefits right from the time they start paying interest on their home loan. This will ease their monetary burden considerably and help more home loan disbursements. Similarly, as per the present provision, if a buyer purchases an under-construction property from capital gains, he can avail exemption only if the construction is completed within three years. Since there can be delays due to various reasons, the construction timeline should be extended to five years.

Provide more tax saving on home loan and house insurance premiums. The current limit of Rs 2 lakh should be enhanced to Rs 3 lakh to benefit more. Also, tax concessions on house insurance premiums should be introduced to encourage users to insure their homes from various natural calamities.

Rise house rent deduction limit for self employed, who draw pays without an HRA component, from the current maximum deduction limit of Rs 2,000 a month under 80GG.

As construction industry takes lion’s share in environment pollution, the Budget should provide more incentives to boost green buildings for sustainable development. Since the cost-factor plays a major role, the government should absorb the extra cost and introduce incentives to encourage buyers/builders to go green.

Make additional allocation to develop infrastructure in fringe areas of cities and metros to promote affordable housing. Also, developers of affordable housing projects should be provided with cheaper finance options to complete the projects in time.

Remove the Dividend Distribution Tax (DDT) to encourage REITs.  There has not been a single REIT listing ever since the announcement last year. The presence of DDT deters people to venture into it. The government should do away with it in the Budget.

Provide clarity on GST implementation. For the revival of commercial real estate, implementation of GST is vital. The government should indicate specific date for its implementation. The retail and ecommerce sectors also seek earlier implementation of GST.

Arvind Jain, Managing Director - Pride Group

Every Indian plans to buy a home as and when it becomes financially viable for him or her to do so, and every year brings a new section of young Indians who enter the stream of employed and harbor this aspiration. For potential home buyers, favourable budget is one of the major decision-makers.

Positive changes in indirect and direct taxation policy for salaried class, as well as incentives on property purchase, can boost their financial confidence. Raising the income tax exemption limit will have positive impact on long-term saving and spending patterns. As property is the most favoured investment option for every Indian, the available of more disposable income can satisfy their aspiration. Similarly, tax sops on home loans will trigger more demand for homes and hence help revive the industry.

Parveen Jain, national president, NAREDCO

The top real estate body National Real Estate Development Council (NAREDCO) too has lined-up a set of proposals to be included in the budget for the revival of sagging realty sector.

NAREDCO President Parveen Jain emphasized the need of industry status to the real estate sector and infrastructure status to the housing sector to enable them to attract more investments from large companies and inculcate a sense of “corporate culture and discipline” which will benefit the economy in general and customers in particular.

There should be Special Residential Zones (SRZs) for low cost or affordable housing similar to Special Economic Zones (SEZs) in PPP model where incentives and concessions should be provided through a single window. This will increase the supply of affordable homes in the country.

Land parcel should be adequately increased to meet the demand of 18.78 million housing units for EWS and LIG categories. To achieve the target of 20 million dwellings by 2022, the land and bank financing should be made easy.

Similar to other developing countries, the Housing Finance Companies (HFCs) should get an access to long-term funds like Provident Fund, Pension funds and Insurance for infrastructure and housing development.

Also banks should hike their allocation for housing from the current 3 per cent to 5 per cent of their incremental deposits. This additional fund should be channelized through HFCs registered under National Housing Bank.

To lessen the burden on home buyers, the government should increase the tax limit to Rs 3 lakh from the present Rs 2 lakh of the interest paid on home loans on a self-occupied house.

The three years period for completion from the year of borrowing should be abolished as this will provide the much-needed impetus to housing sector.

The priority sector lending should be extended for home loans – up to Rs 25 lakh for rural, small and medium cities, Rs 35 lakh for metros and Rs 50 lakh for mega cities.

Rental income should be taxed at a flat 10% rate. This will bring down the rentals.

The government should give top priority to Real Estate Mutual Funds (REMFs) and Real Estate Investment Trusts (REITs) and make them free from income tax for at least for 10 years, both for non-residents and residents.

External commercial borrowing should be allowed in all spheres of housing and realty development, including SEZ projects, and FDI is allowed in all housing projects including the under construction ones.

The real estate experts believe that given the required impetus, the real estate sector has the ability to turn around the Indian economy because of its forward and backward linkages with other key sectors and huge employment potential. Will the Union Budget 2016 meet their expectations and revive the sector or disappoint them again with a lacklustre show? We have to wait and watch!

This article also published in Merinews.com

A journey from Madras to Chennai

For a city, transition is inevitable which goes along with the changes in its demographic status. Chennai has transformed into a modern city from what it was a few decades back, says K Ramanathan, who traces the city's journey from Madras to Chennai.

The southern metropolis has come a long way since the black and white era, registering all around development. Once a sleepy and conservative neighbourhood, the city is now full of life with liberal outlook coupled with vibrancy.  Chennai has become a city that ‘doesn't sleep’.

Chennai in 1960s

The development over the years has made visual changes on Chennai’s landscape. New settlements, roads, bridges, subways, high rises and business establishments have been added to cope with the rising demand. And one can’t deny the role real estate has played over the years in transforming Chennai into what it is today.

A look at Madras

Though the changes have made a paradigm shift to city landscape, it has brought in a host of inherent challenges as well. A few old-timers recalled that Chennai in those days was having less congested roads, quiet surroundings and blessed with fresh air and copious water, which gave the inhabitants a comfortable and quality life.

“In 60s and even earlier, though real estate was as vibrant as today’s in Chennai, only plot development was popular among realty developers. The Usman Road, which is now filled with jewellery, garment and other commercial establishments, was once occupied by real estate companies to sell plots - both within and outside city limits. The Corporation too encouraged residents to buy plots to construct individual homes. City Improvement Trust (CIT) was formed

Dr R Kumar

to develop plots. Today’s CIT Nagar and CIT Colony were the outcome of this Trust. Later, with the advent of Tamil Nadu Housing Board (1961), Ashok Nagar, Shastri Nagar, Indira Nagar, Besant Nagar, KK Nagar and Shenoy Nagar came into existence as plotted development. Anna Nagar was developed after the World Trade Fair in 1969 and Visvesvaraya tower (now know as Anna Nagar Tower), was built in the subsequent year. Later Tamil Nadu Housing Board developed residential plots, built apartments, roads, schools, commercial complexes, bus terminus and parks in Anna Nagar,” says Dr R Kumar, Managing Director, Navin Housing and Properties (P) Ltd, and one of the long-time residents of Chennai.

Loss and gain

Reminiscing about the replacement of several old landmarks due to the inevitable urbanisation, Dr Kumar, who is also the Chairman of Confederation of Real Estate Developers' Associations of India (CREDAI), Chennai, said, “We have lost very many buildings which were once the landmarks of the city to the rapid real estate and infrastructure developments. Popular yesteryears’ theatres like Saffire (1964 -1990), Gaiety (1914-2003), Wellington (1918 -2010),

Kamadhenu (1920- 2008), Nagesh, Chitra etc have been replaced with multi-storey shopping complex-cum-office structures. Hotels Oceanic, Aun, Dasaprakash and Ram Bhavan are no more now.  Breez and JW Marriott too are getting replaced with residential and commercial high-rises. But I feel that unless the buildings are architecturally important, we don’t need to worry about their non-existence anymore. Buildings, which are 30-40 years old, have to be redeveloped.”

Agreeing to Kumar, Sanjay Chugh, Head–Residential Services–Chennai, Jones Lang LaSalle (JLL) India, says, “Redevelopment has indeed changed Chennai’s landscape considerably. Egmore was the first to experience the trend in 1970s. Even today, several bungalows and independent houses are getting redeveloped to multi-storey and commercial complexes.  The trend has spread to other areas as well.”

But there are a few landmarks which withstood the time such as LIC building, which was once the tallest tower in Chennai, Fort St. George, Amir Mahal, SBI building, Chennai Central and Egmore Railway Stations, Bharat Insurance building, Chepauk Palace, Ripon building, Presidency College, Parrys Building, Theosophical Society, Madras High Court, General Post Office, Anna University, Higginbotham's, Victoria Public Hall, etc.

Madras vs Chennai

Comparing old Chennai with the modern metro city, old timers feel that in those days, the quality of life was better though they did not have technology at their disposal. The infrastructure set up available was enough to meet their civic and sociological needs.

N Nandakumar

“Though we didn’t have much motors on roads in 60s or 80s, the city landscape was filled with full of greenery and hence the air was fresh. We had sweet ground water. Though we didn’t have adequate transport connectivity, visiting far-off places was never a burden for residents. But today, even people have swanky cars, visiting a place just few kilometers away has become an arduous task. The city has grown exponentially, no doubt, but sans basic infrastructure. Hence the quality of life has gone substandard. We depend on obsolete infrastructure and sanitary system. Chennai still has open drainage at several places, which is appalling. We have acute water and power shortage. In short, the city is yet to become self-sustainable even decades after the Independence,” says N Nandakumar, President, CREDAI, Tamil Nadu.

Countering that the redevelopment of old buildings and construction of new high-rises have indeed helped to meet the city’s growing housing demand, Sanjay opines, “Such large development has narrowed the demand-supply gap. Old buildings must be redeveloped, which not only increases housing stocks, these buildings can be better planned incorporating modern facilities.” Agreeing that the increase in population density has put pressure on city infrastructure, he says, there is still room for the planners to improve the living condition of denizens.

He says, rapid transport systems like Chennai metro and mono rail would go a long way to connect far-off areas to the Central Business District (CBD). “As far as real estate in Chennai is concerned, one thing that has changed over the years is the home buyers’ conservative mind-set. Thanks to the improved connectivity, people, who once refused to think beyond Mylapore, Mambalam, T Nagar, Triplicane, Adayar, or Nungambakkam, are going beyond Ponnamallee, Kottivakkam, Kelambakkam Thiruvottiur or even Chengalpet. For instance, home buyers in those days used to give importance to location than other things like amenities and infrastructure. This has changed now. For buyers, distance is not a matter anymore.

“In those days, people even dare to think beyond Adyar River for habitation purpose. Plots on the   other side were sold for pea-nuts as no one would want to invest money there. But those who had invested in land there saw rapid development within few years. People are no more conservative as far as choosing the place for dwelling is concerned. Their outlook has changed. Even Tindivanam and Thiruvallur look nearer now,” says Kumar.

Advent of high-rises

LIC building on Anna Salai was the first skyscraper of Chennai, built in 1961. The building marked the transition from lime-and-brick construction to concrete columns. LIC remained the tallest for over 35 years before it was replaced by Hyatt Regency in Anna Salai and Arihant Majestic Towers in Koyambedu, in the mid-1990s.  TVH Ouranya Bay 1 is presently the tallest building in Chennai with 30 floors.

“People from nearby districts and states, who used to come to Chennai, never missed the opportunity to visit LIC in those days. So, when the fire broke out in July 1975 which destroyed a few levels of the building, the incident saddened everyone in the state and also made the city planners think about fool-proof fire safety methods for high-rises, says Muralidharan, a retired government teacher from Royapuram.

The CMDA building in Egmore was the second skyscraper in Chennai built in 1972. “Multi-storey buildings for residential purposes were not preferred due to non existence of demand and no private developer wanted to do a project on such a large scale. Also, buildings with sustainable features were not known to many. We built the first multi-storey ‘intelligent’ (green) building of South East Asia in Chennai at Egmore for Madras Metropolitan Development Authority (MMDA) now known as CMDA. With 12 floors, the building was made sustainability in mind. This was followed by several such buildings across the country,” says Dr Kumar, who was the Planner In-Charge of the building.

Future scenario

For Chennai, urbanization is now at its zenith, growing in all sides. Thanks to the industrialization which made the southern metropolis a major hub for automobile, IT and ITeS, Education, Engineering and allied industry and Manufacturing and Service sectors, housing needs have gone up manifold. The realty in city has no option but to grow vertically, providing homes in multi-storey and community environment. Homes are getting smaller to make affordable. “However, over the years development did not go hand-in-hand with the quality of life,” says Nandakumar, who is also the Managing Director of DevinarayanHousing and Property Developers.

The IT boom has brought in a lot of changes in terms of real estate development along OMR, ECR and GST Roads in 90s and early 2000. The rise in housing demand has produced realty hotspots along these corridors and new places were added frequently along west and north Chennai. But still, experts believe that the city planners need to do a lot of groundwork to make the city self-sustainable.

“We need to improve the basic infrastructure in Chennai to make it a developed city.  Bad roads, inadequate drainage and drinking water facility, faulty drains, frequent power outages, non-dependable public and private transport systems are some of the deterrents we need to address to make the city progressive,” Nandakumar adds.

“Chennai’s demographic picture is changing quite rapidly with multi-cultural and community living becoming the accepted norms for home seekers. The ambitious Chennai Metro Rail and Mono Rail projects will take Chennai to a new level of development in the coming years. The MRTS will bring far off places, which are now on the outskirts of the city, within the reach of Chennai’s CBD. We will see rapid reality development along the corridors of the metro and mono rail routes and this will increase the housing stocks,” adds Sanjay.

Celebrity speaks

S Ve Shekher, Actor and Playwright

“Growth without infrastructure is what I see Chennai from 60s to today. People don’t have space to park their vehicles. Roads which were once turning as ‘U’ bends have became ‘V’ bends now, thanks to encroachments. The classic example is Santhome to Thiruvanmiyur road. Subsequent governments did not bother to address this issue and the ultimate sufferers are the road users. Roads are the same today as it was a few decades back. Though we have more bridges, flyovers and subways, they failed to address the traffic congestion. Over the years, buildings have replaced the greenery and people have to fight for their basic needs.”

For Chennai realty, South grows while North wanes

It is ‘South-Side Ho’ as far as Chennai real estate is concerned. Unprecedented one may call it, but the city is growing at a phenomenal pace, albeit unevenly. There is a clear north-south divide as southern localities have been growing at a faster rate with newer locations frequenting on the realty map almost every month, while north city has been left to fend for itself.

Shocking it may be, but some of the localities in North such as Madhavaram, Puzal, Tiruvottiur, Avadi, Manali or Meenjur, which are within Chennai Corporation limits, do not even have basic facilities like tar roads, sewage and drinking water connection and streetlights, leave alone other amenities like parks and recreational facilities that their southern counterparts are endowed with.

The alleged step-motherly treatment to northern localities has indeed affected the real estate growth and investors and realtors seldom look for investing or launching new projects there, due to locational disadvantages coupled with poor infrastructure and lukewarm demand. 

 Static growth

According to a recent report, almost 90 per cent of the projects are presently concentrated on South and North Chennai localities, with more than 60 per cent of them are under various stages of development in peripheral areas.

“I bought a flat in Thiruvottiur four years back for Rs 15 lakh and when I tried to book profit, I was quoted somewhere around Rs 17 lakh citing ‘not much growth’ and lack of basic facilities. Had I invested this money in a property at any of the southern Chennai localities somewhere on GST Road, OMR, or even in Sriperumbudur, which is one the fast growing areas in Western corridor, I could have got atleast 40-50 per cent appreciation in capital value,” rued Sadagopan, a realty investor from Ambattur, who is now planning to shift his focus to OMR, ECR or GST Road locations.

Denying that there is any such divide, N Nandakumar, Managing Director, Devinarayan Housing and Property Developments, said, “As North Chennai developed to an industry-centric area much before South, the dominance of blue-collared community had paved way for the growth of residential, basic and social infrastructure to suit people’s necessities and affluence. However, unfortunately, one may call it, the presence of industries has failed to transform, modernise or upgrade North Chennai to a formidable region as the focus of development of the city had shifted to South and its peripherals areas for various reasons.”

 Key drivers of South

Explaining that the disparity in realty development between north and South was due to the key drivers the latter was enjoying such as employment, physical infrastructure, connectivity to important locations, access to social infrastructure, planned development, proximity to premium office spaces, accessibility to southern districts and vast land availability, WS Habib, Managing Director, Ramky Wavoo Developers and Treasurer of CREDAI Chennai, said, the IT/ITeS, manufacturing and automobile sectors are going to be the major driving force for overall growth in Chennai.

Over the next five years, 21 million sq ft of additional office space will be absorbed in Chennai with southern areas alone accounting for 18 million sq ft. This would further trigger the housing demand in this part of city, he explained.

Agreeing that IT boom has made all the difference for South Chennai, Nandakumar, who is also the Chairman of CREDAI, Tamil Nadu, said, “Dominated by white-collar segments’ affluence and IT boom, South Chennai has seen phenomenal development in tandem with the urban agglomeration. Having said so, in recent times, North Chennai too has started attracting developers as large land parcels are being transformed into residential and related social infrastructure development.” However, north has a long way to go to catch up with south, feel realty experts.

Change in sight

Arguing that physical and social infrastructure in North Chennai did not keep pace with growth in South Chennai leading to a widening of gap in preference of South over North among homebuyers, Sanjay Chugh, Head of Chennai, Residential Services, Jones Lang LaSalle (JLL) India, a leading real estate research firm, said, “North Chennai was the first commercial hub and home to traders and wholesalers who had established their business right from the British era. The area around the commercial hub also gradually developed residentially due the captive demand from the community that had their business interest in North Chennai. However, post 1960’s there was a gradual move towards Central and South Chennai and these areas witnessed development of social and physical infrastructure. With the IT boom in the 90’s there was a quantum jump in demand for commercial, residential and retail space in the Southern parts of the city and property prices saw a healthy appreciation.”

However, the gap between the North and South areas of Chennai is showing some reduction, thanks to the shifting of focus of some of the leading builders towards several areas of North and North West Chennai for the last 2-3 years.

Sanjay added, “Over the last few years prominent developers from Chennai like Prince Foundations, VGN, Arihant, TVH, Landmark, Chaitanya, Ganga Foundations and Navin’s have ventured into North Chennai in a bid to create quality living spaces. Metro Rail connectivity to North Chennai is expected to further stimulate growth prospects.”

Blaming the mindset and overall poor infrastructure for its current status, Habib said, ‘Even after several years, people still reminisce rickety buses, narrow by-lanes, overflowing sewers and mechanics and hawkers doing business on footpaths in north Chennai. Much of North Chennai is industrial land and has traditionally been the hub for industrial and warehousing facilities due to its proximity to the port. The residents are largely from labour and fishing communities. The purchasing power of these people is comparatively very less for a premium development.”

The traditional perception of north Chennai having high crime rates is also hitting the realty development, he pointed out.

On the other hand, South Chennai with its proximity to the IT parks is seeing high development due to employment opportunity, which drives the overall growth of the real estate sector here. “However, in the recent times, the purchasing power of lower and middle income groups in North Chennai has increased manifold. The second and third generations to those who worked in railways, industries here are moving up in the economic ladder. The increased purchasing power is changing the skyline with a number of large-scale properties setting up base there,” he reasoned.

About having even growth throughout the city, Habib added, “If IT zones and other industrial zones are notified in various parts of the city, rather than in one particular location, development would be evenly distributed.”

 Perceptions matter

Pitching his view on the uneven development in Chennai, Dr R Kumar, MD of Navin Housing and properties, said, “Actually, it is the chicken and egg question, and we cannot say that it is because of Governments’ intervention/inaction or it is because of the elite's preference, but the fact is, the combination of these two factors virtually created north-south divide. You can see parallels in the Hoogly and Calcutta divide as also the old Delhi and New Delhi divide, where it is more pronounced.”

“In addition, I also think there is a certain amount of cultural difference, in perceptions and in lifestyle, between North and south Chennai. I think, we have a responsibility to change these perceptions and lifestyle differences by physical intervention, by developing well-planned townships in North as well. At Navin's we are trying to do our bit by developing a integrated project, with all modern amenities, a project, which even South Chennai would be proud of!,” he added.

Price factor

Irony one would say, the distance from Chennai Central Railway Station to IT hub Siruseri on OMR and Katankulathur on GST Road is around 35 km and 43 km, respectively, while, the distance between the Central to Thiruvottiur and Manali is about 11 km. However, the real estate prices in the south locations are far higher than the two mentioned northern localities. While one could purchase a home for about Rs 2000 to 2500 per sq ft in Thiruvottiur and Manali areas, the price is more than double in areas near Siruseri and Katankulathur. However, people who buy a home in some of the northern Chennai localities have to face problems due to lack of sewage and water connection, frequent power outage, darker streets, uneven roads and lack of shopping facility. This tells the ambiguity of real estate development in Chennai.

Since the transport connectivity is awfully inadequate, people from northern localities are finding it difficult to travel to their work place situated in south and other areas.

Though North Chennai areas are being consistently ignored and overlooked for many years, there is hardly any move from the government’s side to develop these localities at par with their southern counterparts. To break the ice, a few builders have recently launched residential projects in and around Ambattur (which is well connected to fledgling Annanagar), however, not many projects are in the offing to trigger realty growth there.  Sad, one may call it.

Will the Real Estate Bill Protect Home Buyers?

MUMBAI:  Property buyers in India have much to cheer about as the Parliament is all set to discuss and pass the much-awaited Real Estate (Regulation and Development) Bill in the current Budget session.

N.Nandakumar

Will the Bill be beneficial to the buyers and protect their rights from the errant developers and fraudulent means of transactions?

“The Real estate Bill will surely protect buyers from errant developers,” says N.Nandakumar  Managing Director, Devinarayan Housing & Property Developments Ltd and executive committee member of CREDAI, Chennai.

However, Nandakumar points out that the cost of administering the regulations by developers will lead to a significant increase in the price of the dwelling unit. “Even already compliant developer companies of repute who are self-regulated are compelled to take the additional admin of the regulatory bill compliances burden resulting in extended project tenure and costs thereof.”

According to property experts, a strong legislation would put a restrain on unethical and unscrupulous practices in the real estate industry, which from the outside looks very fascinating when the skyline of several Indian cities is changing.

“While the penal interest provision could hurt realty players; the Bill if it goes through would indeed in the interest of several buyers - especially the middle class, for whom purchasing a property has been a herculean task (due to skyrocketing prices) and unscrupulous practice adopted by some developers,'' said Ramesh Prabhu, a consumer activist.

Ruing that the Bill should have been passed a few years earlier, V Padmanabhan, an IT consultant in Chennai, says, “I bought a flat from a moderately sized builder who has his presence in west Chennai two years ago. Within one year, we have seen a lot of cracks on the walls of all six flats, all the bathroom fittings have turned rusty and seepages in two flats. On approaching the builder, he refused to entertain any of our grievances. Now, we have found that the sump too small and not properly built. As a result, stagnated water from the neighbouring vacant land gets leaked into the tank. We are now reconstructing the tank at our own cost. Had the bill be passed a few years ago, we could have approached the appropriate authority against the builder for redressal.”

The Bill has been framed under provisions dealing with "property transactions" in the concurrent list of the Constitution that applies to states, making the proposed legislation more than a model law.

Agreeing Prabhu’s view that the Bill would filter out the non-serious players in the industry, Nandakumar,  further says, “ It is also perceived that the challenges likely to be faced by developers in adhering to the regulatory bill, will dissuade entrepreneurs lacking core competency in the building industry to move away from this Industry, thereby leaving more room for serious long term players.”

The Real Estate (Regulation and Development) Bill has proposed the following, which intends to protect the interest of property buyers:

 -- Developers will have to disclose project and contractual details to ensure transparent, fair and ethical business practices. Hence, there could be model agreement which could reduce ambiguities in realty transactions, which buyers may not be familiar with.

-- Moreover, the regulation will make it mandatory for private developers to register all projects before they sell it to buyers. The property shall be registered with all necessary clearances from local authorities.

-- If a developer fails to declare the status of clearances, the Bill provides for levying a fine that can amount to 10% of cost of project or three years of imprisonment.

-- Also ensuring that the developer adhere to timelines, the Bill states that the realty player will have to park 70% of funds for the project in a particular bank account, thereby preventing the  money being diverted to other projects and thus safeguarding property buyers.

-- The Bill also enunciates that developers should sell a residential property on the basis of "carpet area", instead of the current practice of "super area", thereby ensuring that buyers get a better deal and transparency. People know the exact livable area in their flat excluding the common and plinth areas.