Buying a house property involves a lot of money, energy, knowledge of the surroundings (of the property involved) and the most important is the developer of the property with whom you deal. Yes, it is a herculean task to buy a house property in a city like Mumbai, Delhi, Kolkata, Pune, Bengaluru etc with so many procedures and documentation involved right from visiting the site of the building which is under construction or to be constructed, to getting an approval for a home loan from a housing finance company or your bank. And to top it up there are bureaucratic hurdles and rampant corruption which shoots up your total cost of buying your dream home. This state of affairs in buying a property can be attributed to the lack of a regulator (like SEBI for capital markets and IRDA for insurance industry) for the housing sector.
But now citing this predicament for the homebuyers, the Maharashtra State Assembly recently passed the Maharashtra Housing Regulation and Development (MHRD) Bill, which will pave the way for the establishment of the country’s first regulator for the housing sector.
The MHRD Bill, which now needs to get through the State Legislative Council, aims to bring about transparency in the real estate sector and empower homebuyers. It also attempts to demystify some of the popular and often misused terms used in the sector, such as carpet area, built-up and super built-up area.
Some of the important areas of concern to which the MHRD Bill attempts to address are the Mandatory disclosure norms for builders stating details of their housing schemes or projects which they are developing, wherein they would be liable to provide details of the following on their website (after the regulator has given its approval):
- Ownership of land
- Number of flats to be built
- The floor space index (FSI) applicable
- Means adopted to finance the project
- Charges for common areas such as staircases, lifts, parking area etc.
Moreover, the MHRD Bill also ensures that homebuyers are not mislead by the use of terms such as built-up and super built-up area. Also it seeks to ensure that developers make their promises realistic and deliver projects on time. Thus for failure to complete the project within the time period (as mentioned in the agreement between the buyer and the developer), the bill has also proposed a penalty of upto Rs 10,000 for each day of delay. Moreover, the MHRD bill has said that no possession of flats can be given to the buyers before occupation certificate has been obtained by the developer.
Also, giving due concerns to the environment, the MHRD Bill mandates to promote energy efficient or green buildings that are environment friendly and asks it to create regulations that are consistent with the national building code and rules and regulations framed by the State Governments and municipal bodies to bring consistency and remove ambiguities. Setting up a rating system for projects may also be given as a mandate to the regulator.
We are of the view that, such a comprehensive MHRD Bill will pave the way for a transparent and more efficient home buying environment in the State of Maharashtra. Removing the major hurdles and also providing grievance redressal for home buyers, will give a fillip to the home buying activity in the State. However, along with the passage of this Bill, the Municipal Authorities should also be directed to be more active in order to reduce the bureaucratic delays and discourage corruption at all levels. The Maharashtra State Government should also lay down strict safety measures to be adopted by the developer while constructing any building or such structures. Furthermore, if the Bill passes the muster as proposed it will shore up your trust as a homebuyer.
The MHRD Bill being an initiative taken by the Maharashtra State Government, the other State Government’s should also follow suit. What is required is an initiative from the Central Government to form a Real Estate Regulator that can strictly regulate the Indian Real Estate sector which at present carries a lot of uncertainty, malpractices and mis-selling. It will also, to an extent help prevent corruption and black money that is free flowing in the Real Estate sector in India.