New Bill to Bring Greater Regulation to Real Estate Sector

Posted by Reading Time: 3 minutes

Jun. 7 – India’s Union Cabinet passed the Real Estate (Regulation and Development) Bill 2013 this week after congress agreed on changes to garner wider approval for the Bill. The Bill will put into effect a uniform regulatory system for real estate developers and will impose sanctions on any agent that misrepresents the scope and characteristics of their developments and properties.

The real estate market has been a hot bed for corruption in India due to the lack of an oversight entity. In the past, it has not been uncommon for contractors to demand under-the-table payments to finish a construction project or for agents to manipulate the prices of the estates they represent.

“The absence of a regulator is the root cause of corruption, anxiety and malpractice,” said Deepak Parekh, chairman of India’s largest real estate finance company.

Hoping to put an end to corruption in the real estate sector, Housing Minister Ajay Maken introduced the bill earlier this year during Union Budget discussions, yet the bill wasn’t passed until this week after debate in parliament was resolved.

“The Bill will greatly reduce the prevailing rampant corruption in the real estate and housing sector. Not only will it protect the rights of home buyers, but it will also bring in greater transparency,” said Mr. Maken.

The new Bill will set in place a regulatory oversight body for the real estate market to monitor the sector and impose fines and even jail time for repeat offenders in violation of the Bill’s new regulations. For those who misrepresent their development projects, a fine will be imposed equal to 10 percent of the project’s cost, with repeat offenders possibly facing prison time of up to three years.

Under the Bill, developers must obtain all statutory approvals for their projects before construction can begin and they will be bound by stricter rules for reporting the floor area ratio for their developments. Furthermore, every development project will be subject to approval by the new regulatory oversight body with the development plans available to the public for comment before construction begins.

The bill is a positive development for many participants in the real estate market who will benefit from the greater transparency that will result from the new regulations.

“It is a welcome step. We had been waiting since long [for the bill] as it would bring buyers at ease along with transparency and respect to the sector,” said Naveen Raheja, President of the National Real Estate Development Council.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

For further details or to contact the firm, please email, visit, or download the company brochure.

You can stay up to date with the latest business and investment trends across India by subscribing to Asia Briefing’s complimentary update service featuring news, commentary, guides, and multimedia resources.

Related Reading

An Introduction to Doing Business in India
In this guide, we introduce the basics of setting up and running a company in the country and some of the key issues investors should pay attention to. This issue is currently available as a complimentary download on the Asia Briefing Bookstore.

Mumbai’s Commercial Real Estate Market