The Confederation of Real Estate Developers Association of India, while welcoming, in principle, the proposed law to regulate the sector, has objected to the move to load most of the accountability on to the developers while leaving out the other stakeholders. The provisions, if implemented in the present form, would only add to the delay and cost of implementing construction projects, it says.

At a press conference on Wednesday, Mr Prakash Challa, National Vice-President, Credai, said the Real Estate Regulation of Development Act, which was proposed in 2008 and subsequently modified, is yet to be enacted.

But in its present form it would only complicate development further because the law seeks to put in place a regulatory authority that is expected to register and, in effect, again give approval to residential projects that have previously gone through all statutory approvals.

This would mean an additional three-six month delay over the project approval time of up to a-year-and-a-half for large residential projects. This would only add to the cost for the end buyer and complicate paper work, he said.

Accountability for all

Credai, while welcoming the move to regulate developers, feels that instead of project-wise approval the proposed regulator should bring in a system to assess and register developers, he said.

Also, the burden of timely delivery and accountability is entirely loaded on the developer. But the other parties in a residential project include financial institutions funding the project and supporting buyers through home loans, the buyers and the local authorities who approve the projects. All the parties in the deal should also be held accountable, feels Credai, he said.

Mr T. Chitty Babu, President, Credai – Tamil Nadu, said the developer’s body estimates that the proposed regulation alone would add Rs 296 a sq.ft to the cost of built-up space for a project priced at Rs 3,000 a sq.ft which would include a construction cost of about Rs 2,000.

This would be in the form of further delay, bank guarantees, escrow fund and other provisions as envisaged in the proposed law.