The India Union Cabinet has just approved a bill to set up a uniform real estate regulator to keep developers in check and protect Indian home buyers, according to a government statement. And the bill should also improve the confidence of private investors in the sector, according to one private equity real estate firm.
The Real Estate (Regulation and Development) Bill 2013 was conceived primarily to “make real estate development transparent and consumer friendly,” according to Ajay Maken, Union Minister of the Housing & Urban Poverty Alleviation department. It has proposed to set standard definitions for real estate terms and require real estate agents to register with the government.
Real estate regulation in India has historically been opaque and India’s developers have become infamous for unscrupulous practices, including false advertising, misallocation of funds and long delays in project completion, according to local media reports. Developers in India almost universally opposed the bill, but with the Union Cabinet’s approval, the bill now has only to be adopted by India's local jurisdictions.
The bill “aims at restoring confidence of the general public in the real estate sector; by instituting transparency and accountability in real estate and housing transactions which in turn will enable the sector to access capital and financial markets essential for its long term growth,” the statement said.
Yash Gupta, senior managing director and country head of Hines India, said that the bill would “help capital allocators breathe easy” knowing that there is a regulator in place to enforce a standard of conduct.
“Many [investors] are concerned about the questionable policies some of the developers adopt, but they can’t always be policing them or even do anything about it,” Gupta explained. With a universal regulator in place setting a nationwide standard, a professional code of conduct would be far less of a concern.
“Investors could then be much more confident that their capital will not be abused or subject to embarrassment later on,” he added.
Gupta admitted that this is only a step for India – the bill still has to be approved and adopted by India’s twenty-eight states, and could create a problem with bureaucracy. He was confident that the government’s intent, however, is to create more clarity for home buyers.