Rahul Gandhi needs to do his homework on Real Estate Bill

After coming back from his agyaat-vaas of 56 days, Rahul Gandhi has found a new way of doing Politics. He is following the hit-and-run approach, or maybe treating politics like a Twitter account. Everyday, he sees the trending hash-tag, makes a generic statement along with the hash-tag, and moves on to the next topic. He started with Net Neutrality, but didn’t make much sense. He went on to the land bill, just repeating adages like “corporates ki sarkar”. He then went on to appeal to Hindus by visiting Kedarnath. He then travelled by train to meet with “aam aadmis” travelling by train, and then to farmers in Punjab. Now he has climbed on the Real Estate Bill bandwagon and come out with another catchphrase, calling the bill “Pro-Builder”.

But what is this Real Estate Bill? Its a bill which will bring about regulation in the Real Estate Sector of India, which is completely unregulated as of now. Builders going back on promises of all types is one of the major concerns. Now this bill wishes to address all these problems. A brief history of this bill:

Stage Date
Introduction in Rajya Sabha Aug 14, 2013
Referred to Standing Committee Sep 11, 2013
Report of Standing Committee Feb 12, 2014

The standing committee was headed by Sharad Yadav of JDU, and had 28 members, of which 11 were from Congress, 1 from NCP, 2 from TMC, 2 from Shiv Sena and 6 from BJP, and some other members of smaller parties.

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Firstly, in his grandstanding yesterday Rahul Gandhi showed the plight of a home-buyer from NCR who had been duped in 2012. It was quite ironic to see Rahul take the high ground on this, although in 2012, his party Congress was ruling both Delhi and India. Could Rahul Gandhi in power not have come to the rescue of this lady in 2012 itself? Or is it that Rahul Gandhi was blind to people’s problems in power, and has suddenly woken with the rude shock of 44 seats?

Secondly, UPA came into power in 2004. Real Estate sector has always been a mess, it is not a new phenomenon. Why did UPA take 9 long years to introduce such an important bill? Where was Rahul Gandhi’s love for home buyers for 9 long years from 2004 to 2013 when nothing was done for the average middle class buyer? If the UPA had passed this law even mid way through their tenure, that is in 2009, this lady would not have been duped in 2012, the law would have come to her rescue. Did Rahul Gandhi wilfully protect builder lobby for 9 years? 10 years if you count the fact the law never got passed in UPA tenure.

Thirdly, in his brief statement on the Real Estate Bill, Rahul Gandhi made no substantive, objective points, just plain rhetoric. He talked about super area being promised as against the are being given by builders finally, and about views being promised and buildings coming in place of such views.

When someone asked him specific problems, he said,

“Main dilution yeh hai, ke humare bill mein clear transparency thi, carpet area jo sign kiya hai woh milna chahiye, this has been diluted” (Main dilution is that there was clear transparency. The carpet area that you sign is what would be given. They have diluted it)

It seems Rahul Gandhi has not done his home work. This post says, with the new law, Carpet area will be clearly defined. And Deepak Shenoy of CapitalMind.in, in this detailed analysis, says:

Real estate can only be sold by the actual carpet area – so builders have to offer a cost per square foot of carpet area.

It is pretty clear from above, Rahul Gandhi has again got it wrong. This is what happens when you go away on holidays and cram whatever you can 1 day before the exam.

Other significant improvements in the new bill over UPA’s bill are as follows:

1. The UPA bill was applicable only to residential real estate. It is now proposed to cover both residential and commercial real estate

2. The UPA bill proposed only one Real Estate Regulatory Authority for all of India, the new bill proposes Establishment of one or more ‘Real Estate Regulatory Authority’ in each State/ Union Territory

3. The UPA bill said registration of projects when area is below 4000 sqm was not needed, this threshold has been brought down to 1000 sqm, thus bringing more projects under the regulator.

4. The builder can now alter or modify structural designs only if two-thirds of the buyers agree

One issue which has been raised, of course by those who have read the bill, not by Rahul Gandhi, is the apparent watering down of one clause. The new Bill requires that 50% of all money received by the builder has to be transferred to a separate account, which is used only to meet construction expenses  of that very project. This proportion was 70% in the earlier bill. The purpose of this clause is to avoid builders shifting funds from project A to project B.

This reduction has come via recommendations of the Standing Committee, formed during UPA time, and which had a majority of Congress MPs. Even so, the logic behind this move is pretty solid. As per the old bill, since 70% is kept in a separate account to use only for “construction” expenses, the balance 30% is the only free money with the builder. The builder has to make do with this 30% to meet initial costs like land acquisition, security deposits and fees to the authorities for sanctions and other statutory clearances. And in many cases, especially in projects in metros and other big cities, the cost of the land will be easily more than 30% of the total costs. In such cases it becomes impossible for the builder to meet his initial expenses.

And fact is, currently there is no such clause at all, and even a 50% limit, would greatly help buyers. While Rahul Gandhi hasn’t been tutored about this yet, he very well maybe, and even then he needs to be pointed to page 35 of the Report of Standing Committee of Parliament.

co-founder, OpIndia.com

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