Real estate firms express concerns over regulatory Bill1 min read . Updated: 12 Nov 2009, 11:19 PM IST
Real estate firms express concerns over regulatory Bill
Mumbai: Real estate companies are ambivalent about a proposed regulatory Bill for the industry. While the idea of a regulator for the industry is welcome, companies are wary about the extent of government intervention in their day-to-day operations.
“The concern is on the shape and form the regulator will take and I think those concerns are justified...in terms of how much the interference will be on your day to day operation," said Rajeev Piramal, vice-chairman of Peninsula Land Ltd.
A clause that mandates licences for real estate firms has aroused concerns that it may be a throwback to the so-called licence raj of government controls.
Indian real estate companies are already required to obtain more than 50 permissions for a project which takes them more than a year to secure. A singe-window clearance system has been the sector’s key demand for a long time.
Licensing will lead to “not regulation but strangulation," says Niranjan Hiranandani, chairman, Hiranandani Constructions Ltd.
“The bureaucracy or government can delicense a developer because he has done some mistake which means if the state government does not like a developer, they can fault-find a developer and delicense," he added.
The requisite permissions are issued by state governments. Almost all major developers have a pan-India presence. Some companies wonder how a common regulation can be enforced across the various markets.
“The regulatory Bill is trying to put a regulator in place for the real estate sector as of now, but the problem is that every city and town in this country has a different development control regulator," says Sarang Wadhawan, managing director of Housing Development and Infrastructure Ltd.
While these may be valid concerns, banks and fund managers say regulation is essential as it will increase vigilence.
It has been a common practice for developers to use funds for aquisitions meant for construction.
The introduction of a regulator in the sector is expected to plug this and ensure transparency, which in turn, stands to benefit consumers.