Many
developers / promoters have projects that are spread over less than 4,000
square meters. Registration with the Real estate regulator would not be compulsory
for them. So many smaller developers will escape the regulators scrutiny.
In
cities such as Mumbai, Chennai cities especially, project areas tend to be
small since large pockets of land are rarely available.
A
developer will now launch a project only after he has received all the
approvals, which is a timetaking process. We anticipate a drop in new launches,
at least in the short run. Furthermore, property prices will rise due to
various factors such as additional capital burden & paper work once the Bill comes in force, says
Niranjan Hiranandani, MD, Hiranandani group of companies
.
Builders
also claim that the provision asking them to deposit 70 % of the amount
realised from sale of their project in a separate bank account will affect
their liquidity and may add to costs.
Retaining
the amount realised from property buyers and placing it in banks will affect
the cash flows of projects. It will create difficulties,especially in
metropolitan cities where land is a significant proportion of total project
cost and is paid for by the promoter, says Mr. Firdose Vandrevala, Chairman,
CII National Committee on Real Estate & Housing.
If
at all such an account has to be maintained, the limit should be lower and it
should include payment of interest &
EMI pertaining to loans availed for project construction, he adds.
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