With a view to provide impetus to the ease of doing business in India and attract Foreign Direct Investment (FDI), India has enacted the Real Estate Bill, which is expected to bring transparency and accountability in the sector. Opacity in the real estate was a major hindrance that prevented foreign capital to be invested in the sector. FDI in construction nosedived by 84% during the first nine months of the current financial year. Analysts believe that the Real Estate Bill can bring more credibility to the sector and could encourage FDI flow into the sector.
According to global financial services firm Nomura, the bill could go a long way towards protecting the interests of home buyers by facilitating more timely completion of projects and ensuring greater transparency. “Mandatory disclosures and registration may reduce black money transactions in this sector; and greater credibility of the real-estate sector (through greater transparency and accountability) could encourage flow of FDI funds into the sector,” Nomura said in a report.
it will also help in facilitating investments through FDI, REITs and other innovative real estate financing models will help attract long term funds from foreign and domestic investors it will also help in facilitating investments through FDI, REITs and other innovative real estate financing models will help attract long term funds from foreign and domestic investorsThe bill could also help in facilitating investments through FDI, REITs (Real Estate Investment Trust) and other innovative real estate financing models. Greater transparency, information in the public domain, accountability and responsibility for developers will definitely help attract long term funds from foreign and domestic investors. The bill was very crucial as major reform step to regulate the vast real estate sector.
The Bill proposed setting up state-level real-estate regulatory authorities, where builders will be instructed to register all projects above 500 square metres (earlier 4000). The legislation will be applicable to both residential and commercial real estate projects, including those presently under construction. State-level appellate tribunals will be set up for addressing complaints. A timeline of a maximum 60 days has been set for resolution of disputes. Failure to register a project could result in imprisonment of up to three years for developers or 10 per cent of the project cost or both. The law will make it mandatory for developers to divulge actual size of apartments. The bill is aimed at bringing overall financial discipline and providing comprehensive consumer protection.
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