by Moiz Mannan
Non-resident Keralites wishing to buy a home or invest in property in their native place may heave a sigh of relief with the Oommen Chandy government reviving moves to enforce a new law comprehensively dealing with the protection of home buyers.
NRI dreams and aspirations to own property in the home state have got a boost with a conducive atmosphere in the property market — it is rising from a slump — and easing of property buying rules coupled with the foreign exchange advantage offered by a weak rupee.
Kerala has set a new record in remittances this year by already reporting a whopping 36 percent year-on-year spike in inflows as of June-end. The over 2.5 miliion Keralites living outside the country contribute over 35 percent of the GDP of Kerala. There were media reports that NRIs were borrowing money from credit cards and bank loans and pumping them back to the country to make arbitrage income, as interest rates are low in those countries coupled with the steep plunge in the rupee.
According to a report by the Migration Unit of the Centre for Development Studies, Thiruvanathapuram, remittances today account for 1.6 times the revenue receipt of the Kerala government, 6.2 times what the state gets from the Centre as revenue transfer, and is more than twice the government’s annual expenditure.
Although not all remittances are routed to the real estate market, builders and developers in Kerala have reported a marked increase in demand from the NRI sector. The Indian rupee has depreciated by nearly 25 percent against most Gulf currencies this year. According to one property market estimate, when the rupee was at 42-45 to a dollar, the market had 30 to 40 percent of its demand coming from NRIs. Now with the rupee at 60, the demand is between 50 and 60 percent.
Having said that, people in Kerala would still remember with some amount of horror the
Rs1bn property scam of 2011. A Kochi-based company used a marketing blitzkrieg offering villas and apartments in the heart of the city at throw-away prices to attract buyers. Some 125 Indian expats in the Gulf were among hundreds of investors who were left in the lurch when the promoters vanished with their money.
During investigations, the police admitted that this major scam was just the tip of the iceberg and many such fly-by-night operators were fooling gullible investors. Expats in the Gulf are particularly prone to such tactics by fraudsters attracted by their new-found riches.
There had consistently been a demand from associations of expats as well as local home-owners for the government to tighten the laws. This was more of a nationwide phenomenon and India’s central government too has drafted a bill to regulate the real estate market mainly to rid it of shady operators. The proposed central enactment was Kerala’s excuse so far for not coming out with a law of its own.
Kerala Chief Minister Oommen Chandy said at a media briefing after a recent cabinet meeting that moves to clear the bill — drafted in 2010 by the Housing Department — would be revived.
Among other things, the most significant aspect of the proposed legislation is the provision to set up a Regulatory Authority and an Appellate Tribunal to regulate the development and construction, sale, transfer and management of colonies, residential buildings, apartments and other similar properties. It will host and maintain a website containing all project details, with a view to protecting public interest in relation to the conduct and integrity of promoters and to facilitating the smooth and speedy construction and maintenance of such properties.
The Appellate Tribunal would adjudicate disputes and hear and dispose of appeal against any direction, decision or order of the Regulatory Authority under this Act. The state government or the Competent Authority or any person aggrieved by any direction or order or decision of the Regulatory Authority may prefer an appeal to the Appellate Tribunal.
One of the other important provisions of the bill is regulating the publicity done by promoters and developers to sell their apartments. No promoter shall issue or publish an advertisement or brochure offering for sale any plot, building or apartment, or inviting prospective buyers to make advances or deposits without registering the brochure and filing a copy of the advertisement or prospectus in the office of the Regulatory Authority which would verify the claims.
The advertisement or brochure should disclose the details of the extent and situation of the land, the area of the plots, building or apartments offered for sale, nature of title to the land, the cost payable, names of the agents or property dealers or brokers or middlemen known by any other name through whom the property is proposed to be marketed and such other prescribed information. The brochure given to the customers should bear clearly the registration number and other details of registration.
Similarly, the new law would stipulate that no person shall develop land into a colony of plots or construct a building or convert any existing building or part thereof into apartments, for the purpose of marketing all or some of the apartments without registration of such project with the Regulatory Authority under this Act.
Further, a promoter shall not accept any sum of money as advance payment or deposit, from a person who comes forward to take a plot, building or apartment, as the case may be, without first entering into a written agreement for sale, including as provided in the Act.
Other provisions include on time delivery of project, common amenities promised by the builder, and a warranty period of two years for completed projects.
It is to be seen whether the Chandy administration takes this matter as seriously as some other state governments such as Haryana have taken and issues this legislation without
further delay. The Peninsula
