It is a Bill that has evoked strong reactions and cleaved the industry, with the common man, activists, experts and developers debating vociferously. A not for profit organization Moneylife Foundation, held a recent two-hour late evening seminar, on the new Maharashtra Housing Regulation & Development Bill 2012 at P L Deshpande’s Kala Academy (mini theatre) at Ravindra Natya Mandir, Prabhadevi.
Given that real estate is a topic of deep and abiding interest for the Mumbaikar, the venue was house (no pun intended) full at starting time, 6 pm. After a brief introduction of the speakers, advocate Vinod Sampat and Pankaj Kapoor, founder and Managing Director of Liases Foras, a Mumbai real estate rating & research firm, Kapoor spoke first, admitting that he was a bit, “nervous” as he took the mike.
Kapoor looked at the overall real estate picture evoking some cynical laughter, when he said that the Bill might bring about some key changes in an industry where every irregularity gets regularised. Buttressing his stand with a slide presentation, Kapoor stated that the new Bill may now stop typical vague and rosy declarations on housing brochures like, ‘I am now giving you a dream home’. “This is going to bring about huge transparency as the builder needs to mention possession dates, there are a few mandatory disclosures,” said Kapoor adding that this Bill will bring the industry to “carpet area level. I think this would bring about a new era in the industry as property is going to be sold on the carpet area basis.” Kapoor also stated that there would be no transactions without registration.
Casting his eye on the market, Kapoor said that the primary reason for delays in projects in not enough cash flow. He added that construction pace is sliding and liquidity is not good, sales are not enough and prices have outpaced the consumer. “These prices have put my country on a de-growth curve. I have at least 15-20 friends who want to purchase homes but cannot because of affordability concerns,” he finished voicing a sentiment that resonated with the audience.
Advocate Vinod Sampat, then arrived on the dais. With a touch of the theatrical, he greeted the applauding audience with a cheerful wave of acknowledgement as he was introduced. The housing expert then took the mike stating that the purported Bill was “not 100 but 200 per cent in favour of the developer,” adding, “since 1963 the Maharashtra Ownership Flats Act (MOFA) was a ‘toothless Act’ now, it would be without ‘even one tooth’.”
Living up to the label by which he was described in the seminar flier as, ‘one of the boldest voices in real estate’ straight talking Sampat added that earlier, “Developers had two things to fear, criminal action and the consumer forum. Now, with this Bill, both are out.” Sampat added that while a Supreme Court judgment says that one cannot sell car parking; this Bill states the developer can sell parkings.
Sampat cited clauses within the Bill, drawing attention to the fact that this Bill gave sweeping powers to the builder to pay back 15 per cent as penalty and cancel the contract with the buyer. Sampat asked, "What about numerous taxes like VAT, Service Tax etc. who will pay these back, nothing has been mentioned.’’ He also rued the lack of stress on a Building Completion Certificate, which he stated was very important. Reading a number of other sections which he said were all skewed in favour of the builder, Sampat asked: what is the difference between a govt. or a goonda who takes your money in this way?" signing off his presentation with an effective shredding of the Bill.
The floor of the house was thrown open for a question-answer session to both experts with Sampat saying in response to one question, “A plumber needs to have a certificate, all a builder needs is a sweet tongue and a smiling face.”
Kapoor said in response to a question about real estate market prices and when one might see a downfall, “It is difficult to say if we have peaked. We already see developers retrenching some of their staff, that may be signs of some corrections, prices should start softening. I foresee a gradual correction not a crash.”
The two-hour session closed with questions flying in about building redevelopment and other housing issues. The consensus was that the activists and participants are to send a letter to the Maharashtra governor K Sankaranarayanan urging him not to sign the new Bill. Sampat said he will offer support as a “true soldier” of the Foundation, to cheers.
As the participants filed out into the night, there was the smell of earth in the air and the clouds held promise of rain. Just like those clouds though that did not deliver what they promised, this Bill too it was summed up, even with some redeeming features, would not provide the promised relief to flat buyers from the hurdles and malpractices they currently face.
At a Glance
The Maharashtra Legislative Assembly in July passed the Maharashtra Housing (Regulation & Development) Bill 2012, which seeks to set up what will be the country’s first realty industry regulator.
Once the Bill receives Presidential assent, it is set to replace the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, and management and transfer) Act, 1963 (MOFA). One of its aims is to increase transparency in real estate.
It has evoked diverse reactions and sparked fierce debates between activists and experts.