Real estate sector should form an internal self-regulation mechanism: Venkaiah Naidu

Exhorting the real estate sector to form an internal self-regulation mechanism to improve its image that has been hit due to the wrongdoings of a ‘few black sheep’, Vice President M Venkaiah Naidu feels there ought to be a code of conduct to ensure ethical practices.

“Unless you take internal correctives, unless you evolve a code of conduct and unless you do your business on ethics, the sector and country cannot prosper. The country cannot suffer because of wrongdoings of some people. Few black sheep are spoiling the atmosphere. The real estate sector is an important sector of the economy and should not be allowed to fail. It should take corrective measures and industry bodies such as Credai should institutionalise an internal regulation mechanism,” Naidu said at the Credai YouthCon2019 held in the Capital.

He noted that in the recent times, the sector has come under severe scrutiny from the apex court and consumer rights bodies due to some unethical practices followed by certain entities.

Addressing Credai YouthCon 2019, PM Narendra Modi had also said that despite being the chief driver of the economy and the second largest job provider in the country, the real estate sector suffers from a credibility deficit among homebuyers and should therefore focus on improving its image.

Naidu said that the growth of NPAs in the real estate industry has only not affected banks but also dried up credit to this sector, he added.

He also termed as “very disturbing” a recent CAG report which said that 95 per cent of developers do not have mandatory PAN.

He also said that urban local bodies and state development authorities ought to be made equally responsible for delay in giving approvals to real estate projects. “Delivery of project on time is important. Approval by government and municipal agency is equally important. They also have responsibility. When you want to make real estate companies accountable for delay, you also make local bodies responsible for the delays,” Naidu said.

He also said that all project approvals should be available online and builders should also go for digital transactions.

He noted that the realty sector contributed 7.9 per cent to the GDP of the country. “Being the second largest job provider in the economy after agriculture, the entire country has stake in the real estate sector,” he said.

Finance Minister Piyush Goyal also assured the real estate community that  goods and services tax (GST) rates would be brought down soon for the sector. He said the group of ministers (GoM) under GST Council has worked out a mechanism for taxing real estate sector under GST.

A state ministerial panel last week favoured lowering GST on under-construction residential properties to 5 per cent, from 12 per cent currently.

It also favoured slashing GST on affordable housing from 8 per cent to 3 per cent. Currently, GST is levied at 12 per cent with input tax credit (ITC) on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

On February 13, Niti Aayog CEO Amitabh Kant had asked builders to construct flats in 8-10 months to make projects viable as interest rates were very high in India. He also favoured lowering of GST on under-construction properties.

“When a middle-class family books a flat, you people take 5-6 years to complete construction of that flat. As interest rates in India are too high, so if interest rates for 5-6 years are taken into account, project becomes unviable. So, you people must complete construction of house in 8-10 months,” Kant said.

Housing and Urban Affairs Minister Hardeep Puri said housing is a basic need for development.

“The Prime Minister’s dream of providing a home for all is not a dream anymore. It is a process which is at a very advanced stage of implementation,” he said.

Speaking at a session on Global Housing Technology Challenge, Durga Shanker Mishra, Secretary Ministry of Housing and Urban Affairs, said on Wednesday that, “With the help of GHTC-India, we want to develop an ecosystem for a New India, wherein we are up-to-date with the latest technologies in the construction sector.”

Sessions held at the two-day Credai YouthCon focused on how Housing for All and RERA have changed the game for the real estate sector, the importance of finance in India’s growth story and look at times when finance met real estate.