"The Bill only has provisions for penalising developers in case of delays beyond indicated timelines, but no distinction is made in projects that face delays because of delays in getting approvals."
Even as the Real Estate Bill aims at bringing in transparency and accountability for delay in projects' execution, it hasn't made any distinction in situations where projects are delayed because of approvals, says ICRA.
"The Bill only has provisions for penalising developers in case of delays beyond indicated timelines, but no distinction is made in projects that face delays because of delays in getting approvals. Although the Bill requires the Regulatory Authority to make recommendations for setting up of a single-window clearance system, no firm provision has been included for expediting the approval process," the ratings agency said in a statement.
The sector has been plagued with grave issues over the years such as fraudulent practices, misrepresentations, and project delays largely because of the dominance of un-organised segment (comprising small regional developers with fragmented and unstructured operations) and lack of adequate regulatory supervision.
The Bill provides for mandatory registration of projects with the regulatory authority, strict and fair penalty provisions, protection of land titles, focused dispute resolution mechanism and standardisation of key terms, among others.
Although the regulation has moved forward, there still continues to be ambiguity with respect to implication of bringing the real estate projects currently under construction under the ambit of the Bill.
This would involve issues, such as registration of projects mid-way, changes in terms of sale and implementation of escrow account mechanism.
"The Bill is definitely a step in the right direction and is likely to restore confidence of buyers and investors in the real-estate sector over the long-term. Nevertheless, project execution and delivery are two sides of the same coin and cannot be separated, and hence, a simultaneous focus on initiatives to facilitate timely execution would, be necessary to ensure faster and more effective implementation of the regulation," the agency added.
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