Real Estate Industry

Mar, 13, 2019

Centre allows states to put enemy properties exclusively to 'public use'

Note4students

Mains Paper 3: Economy | Mobilization of resources

From UPSC perspective, the following things are important:

Prelims level: Enemy Property

Mains level: Alternative measures adopted by the government to increase revenues


News

  • The Centre has allowed state governments to put to “public use” some enemy properties that were left behind by people who migrated to Pakistan since the Partition and to China after the 1962 Sino-Indian war.
  • The move comes amid the central government’s efforts to sell more than 9,400 enemy properties, worth over Rs 1 trillion, and Rs 3,000 crore worth of enemy shares.

Enemy Property

  • As per the Enemy Property Act, 1968, ‘enemy property’ refers to any property that was belonging to a person who migrated from India to an enemy country when a war broke out.
  • After the war with China and Pakistan in 1962 and 1965, the government took over the properties, under the Defence of India Act, from persons who migrated to these countries.
  • The confiscated property included both movable and immovable properties such as securities, jewellery, land, and buildings.
  • Later in 1968, a law called the Enemy Property Act was enacted to regulate such properties and entrusted with the Custodian of Enemy Property (CEPI).

Why in news?

  • The guidelines for disposal of the Enemy Property Order, 2018, have been amended to facilitate “usages of enemy property by the state government exclusively for public use.
  • Of the total properties left behind by those who took Pakistani citizenship, 4,991 are located in Uttar Pradesh, the highest in the country. West Bengal has 2,735 such estates and Delhi 487.
  • The highest number of properties left by Chinese nationals is in Meghalaya (57) .West Bengal has 29 such properties and Assam seven.

Total Estimates of Property

  • There are 9,280 such properties left behind by Pakistani nationals and 126 by Chinese nationals.
  • A total 6,50,75,877 shares in 996 companies of 20,323 shareholders are under the custody of the Custodian of Enemy Property for India.
  • Of these companies, 588 are functional or active companies, 139 of these are listed and the remaining is unlisted.
May, 26, 2018

[op-ed snap] The RERA report card

Note4students

Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From UPSC perspectives, the following things are important

Prelims Level: Particulars of the RERA

Mains Level: The issues related to bad implementation of RERA rules in different states.


News

Context

  1. It is a year since the Real Estate (Regulation and Development) Act, 2016 (RERA) came into effect (May 1)
  2. A year after the real estate legislation came into effect, the follow-up in many States has been dismal
  3. There is still a long way to go before the real estate sector operates in an “efficient and transparent manner and protect the interest of consumers”

Implementation of the Act: Issues
Dilution of the RERA rules

  1. Only 20 of the 28 States (the Act is not applicable in Jammu and Kashmir) have framed the rules stipulated under RERA to carry out its legal mandate
  2. In some States such as Uttar Pradesh, the Act’s provisions have been watered down in favour of builders by altering the definition of “on-going projects” which need registration under RERA
  3. There is also a dilution on the penalties for non-compliance

The speedy dispute redress mechanism envisaged by the Act is yet to take shape

  1. Apart from Maharashtra, only Punjab and Madhya Pradesh have appointed a permanent regulatory authority (to be established within a period of a year)
  2. To ease the transition, RERA allows State governments to designate an existing body as the regulatory authority until a permanent one is established
  3. This has resulted in 13 States working with only a designated regulatory authority. West Bengal is yet to even designate a regulatory authority

Other issues

  1. Additionally, only six States have set up the online portal contemplated by the Act
  2. In the Northeastern States, RERA has been challenged on certain constitutional grounds — of land belonging to the community and autonomous councils

Conflict between the IBC and the RERA

  1. One of the most notable provisions of the RERA is the requirement to keep 70% of funds received for a project in a separate escrow account
    (a step to prevent a diversion of funds which usually happens and in turn results in project delays)
  2. Perhaps because of this stipulation and the overall ill-health of the real estate sector, many developers are now facing insolvency proceedings under the new Insolvency and Bankruptcy Code (IBC)
  3. There appears to be a potential conflict developing between the IBC and RERA which needs to be checked as it would be against consumer interests

Government is taking the cognizance of the issue

  1. Recently, the Central government notified June 30 as the date by which all States have to do away with dilutions and bring in all incomplete projects within the ambit of RERA
  2. This date is also the deadline by when permanent regulators have to be formed and for the websites of all States to become functional
  3. One hopes that in due course, developers will recognise that they can no longer operate with impunity by arbitrarily escalating costs of construction or missing timelines without being held responsible
Apr, 12, 2018

Sebi amends norms for REITs, InvITs to make them more attractive

Note4students

Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Securities and Exchange Board of India, REITs, InvITs

Mains level: Various initiatives taken for reviving infrastructure growth in India


News

REITs and InvITs regulations amended

  1. The Securities and Exchange Board of India (Sebi) has amended REITs and InvITs regulations to facilitate the growth of such trusts
  2. This has been done in order to make real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) more attractive

Changed provisions

  1. Both trusts will have to provide a mechanism for resolution of disputes with their shareholders and partners in the holding firm
  2. InvIT will have to file the final placement memorandum with Sebi within 10 working days from date of listing of the units issued therein

Back2Basics

Real estate investment trusts (REITs)

  1. Real Estate Investment Trusts or REITs are mutual funds like institutions that enable investments in the real estate sector
  2. This is done by pooling small sums of money from a multitude of individual investors for directly investing in real estate properties so as to return a portion of the income (after deducting expenditures) to unitholders of REITs, who pooled in the money
  3. A REIT in India is allowed to invest mainly in completed and revenue generating assets and other approved investments
  4. REIT will have to distribute the majority of its income among the unit holders
  5. REITs are set up as a trust under the provisions of the Indian Trusts Act, 1882
  6. Like a mutual fund, it has three parties – Trustee, Sponsor(s) and Manager – to avoid any conflict of interest issues
  7. REITs are regulated by the securities market regulator in India- Securities and Exchange Board of India (SEBI)
Jan, 03, 2018

[op-ed snap] Indian real estate is on an upward trajectory

Note4students

Mains Paper 3: Economy | Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

From UPSC perspective, the following things are important:

Prelims level: Particulars of the RERA, PMAY, etc.

Mains level: Newscard briefly discusses some important reforms done by the government in the Real Estate Sector


News

Significance of the Real Estate (Regulation and Development) Act 2016 (RERA)

  1. The act brought unprecedented levels of transparency into real estate projects
  2. RERA promises to minimize delays in projects, weed out unscrupulous developers, and provide homebuyers with detailed information on the specifications and the progress of the projects they invest in
  3. The Real Estate sector also got benefited due to simultaneous implementation of the RERA and the GST

Other government’s efforts for encouraging Real Estate Sector

  1. The sector will also benefit from the amendments that were made late in 2016 to the Benami Transactions Prohibition Act
  2. This, coupled with the central government’s stated intent to make Aadhaar linkage compulsory for all property transactions, will help in curbing malpractices and stopping the inflow of black money into real estate
  3. The recapitalization of banks will also rejuvenate the banking sector and give a boost to lending(for the sector)

Positove Consequences of these reforms

  1. These reforms will bring transparency and accountability in the sector
  2. Developers need to be sufficiently funded to achieve RERA compliance
  3. Small or cash-starved developers will probably have no choice but to partner with larger, established players to survive
  4. Moreover, unscrupulous developers—big or small—will have no place to hide in the transparent environment that RERA will usher into the industry
  5. The real estate sector will be institutionalized, and probably have fewer—but larger and more reliable—developers in the years to come

Pradhan Mantri Awas Yojana (urban) (PMAY)

  1. The PMAY were amended to encouraged married or single people to invest in property
  2. The government is trying to attract both middle-income and low-income groups to this segment
  3. In September, the central government extended, under PMAY, the benefit of interest subsidy on home loans for households in the middle-income group
  4. This scheme was originally scheduled to end in December, but has now been extended till March 2019

New policies by the government

  1. The Union budget for 2017–18 granted infrastructure status to the affordable housing segment
  2. More recently, the ministry of housing and urban affairs introduced as many as eight public-private-partnership options to encourage private investments in affordable housing projects
  3. These new policies, if implemented well, could give a much-needed boost to this segment and make it a powerful growth driver for the real estate sector

The way forward

  1. A boom in affordable housing and the resulting construction and allied jobs can help make a significant dent in the malaise of joblessness
  2. It can also have a multiplier effect on the national gross domestic product, and boost the demand for different categories of products and services
  3. India’s real estate is transitioning to a new era after what has been a rather eventful year

Back2basics

Real Estate Industry

Dec, 18, 2017

RERA’s administration under Urban Affairs Ministry’s domain

Note4students

Mains Paper 2: Polity | Structure, organization & functioning of the Executive & the Judiciary

From UPSC perspective, the following things are important:

Prelims level: RERA, Government of India (Allocation of Business) Rules 1961, Real Estate (Regulation and Development) Act, 2016, Street Vendors Act, 2014, Government e-Marketplace

Mains level: Changes being brought in by government to ease governance processes


News

Authority defined

  1. The matters related to the administration of the RERA for regulation of the real estate sector and to protect the interest of consumers will be dealt by the Housing and Urban Affairs Ministry
  2. The central government has amended the Government of India (Allocation of Business) Rules 1961, in this regard

Real Estate (Regulation and Development) Act, 2016

  1. It mandates the establishment of the Real Estate Regulatory Authority (RERA)
  2. The RERA is for regulation and promotion of the real estate sector
  3. It will ensure sale of plot, apartment or building in an efficient and transparent manner and protect the interest of consumers in the real estate sector
  4. The law also has provisions for the establishment of an adjudicating mechanism for speedy dispute redressal related to the real estate sector

Other responsibilities given to ministry

  1. The administration of the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014, will also be done by the same ministry
  2. The Act is to protect the rights of urban street vendors and to regulate street vending activities

Government e-marketplace

  1. The development, operation and maintenance of the National Public Procurement Portal Government e-Marketplace has been brought under the commerce ministry
  2. The government had last year launched an e-market platform for public procurement of goods and services
  3. The online platform followed the Centre’s decision to close the Directorate General of Supplies and Disposals (DGS&D), the procurement arm of the Centre
Mar, 11, 2016

Real Estate Bill passed in Rajya Sabha

  1. Aim: To secure the interests of home buyers and expunge corruption and inefficiency from the sector
  2. Provisions: It’s mandatory for residential and commercial projects to come under the purview of a real estate regulator
  3. The builders would be responsible for fixing structural defects for 5 years after transferring the property to a buyer
  4. It is mandatory for every developer to deposit at least 70% of money secured from clients in an independent “third-party” bank account
  5. It has powers to monitor financial transactions and settle property disputes
Mar, 07, 2016

The REIT way for recapitalizing Indian banks

  1. Context: Budget allows full pass-through for real estate investment trusts (REITs) and infrastructure investment trusts
  2. How? By removing the dividend distribution tax (DDT) at the special purpose vehicle (SPV) level under a business trust
  3. For banks: There are possibilities in the use of REIT structure to help state-owned banks not only add to tier-1 capital, but also raise cash
  4. A bank REIT would be a very sought-after product in view of the quality of both assets and a well-regulated bank
Dec, 11, 2015

Real Estate Regulatory Authority on anvil

  1. The Union Cabinet recently gave its approval to the Real Estate (Regulation and Development) Bill, 2015.
  2. The Bill aims to protect the interest of consumers, promote fair play in real estate transactions and ensure timely execution of projects.
  3. It regulates both commercial and residential real estate projects.
  4. It seeks to set up Real Estate Regulatory Authority in states and union territories to oversee real estate transactions.
  5. It makes registration of real estate projects and real estate agents with the authority mandatory.
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