Mumbai // India is moving towards creating a more transparent and well-regulated market, which could encourage more Indian expatriates in the UAE and wider Arabian Gulf region to buy property at home.
India’s union cabinet on Wednesday approved the long-awaited real estate regulation and development bill, which is aimed at making the property market more consumer-friendly.
It features a range of measures such as the establishment of a real estate regulatory authority and banning developers from changing plans without the consent of buyers. The bill now needs to be passed by parliament to become an act before it actually comes into effect.
The lack of regulation and transparency in the Indian property market deters many Indian expats from buying homes in the country, said Samantak Das, the chief economist and national director at Knight Frank India.
“If the consumer is protected to this extent and the real estate sector is made transparent in terms of all that is there in the regulation bill, definitely India will be extremely, extremely attractive for all consumers, either Indians staying in India or Indians abroad,” said Mr Das. “If India can bring in this type of regulation, not only at a central but also at a state level, I’m sure that NRIs [non-resident Indians] staying in the Gulf would look at India in a much more confident way.”
He expected the bill to be passed by parliament in the first half of next year.
The bill applies to residential and commercial projects.
India’s home sales have come under pressure in the past few years, with demand being muted because of high interest rates and a slowdown in the economy.
Given that the UAE and the Gulf region “are far more mature and regulated markets than India, these developments [in the bill] will create a higher interest among the NRI community there to invest in India”, said Saacketh Chawla, the deputy managing director at Colliers International in India.
“By bringing the consumer also in its ambit, in case of defaults in payments, the bill now brings a certain fairness to the table, which makes its passage through the parliament much stronger,” he said. “There are tremendous numbers of consumers out there who will buy as soon as they are convinced that there is law and regulation that safeguards them against market risks and developers.”
Mehul Thakur, the director of Viva Homes, a developer based in Mumbai, said he thought the concept of the bill was “right” but expressed concern some of the measures might “push up costs for developers, which would be passed on to the consumers ultimately”.
He said that having to seek customers’ approvals for changes to plans could also cause problems for developers “if half of them agree and half disagree”. He hoped there would be some further amendments before it was passed as an act, he said.
Buyers and property brokers who violate orders could be jailed for up to one year and have to pay penalties under the bill.
Developers, meanwhile, could face three years in jail and other penalties. But reliable developers stand to benefit, said Anuj Puri, the country head and chairman of JLL India.
“It will create lasting developer brands who shall be known for quality and timely delivery of projects,” he said.
“This bill will bring in the much-needed transparency and accountability in the real-estate sector, though the strict punishment for developers without bringing the relevant government agencies and approval process under its ambit looks a bit one-sided.”
Amendments to the bill that were approved on Wednesday included making it mandatory for projects that cover 500 square metres or have eight apartments or more to be registered with the to-be-created regulatory authority, instead of 1,000 square metres, as had earlier been proposed.
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