India Law Targets Rogue Agents

India Law Targets Rogue Agents

Residential News » Asia Pacific Residential News Edition | By Rebecca Bundhun | June 24, 2013 8:48 AM ET

A number of estate agents in India are likely to shut down once new property regulations planned for the market come into effect, according to the head of a leading industry body.

Lack of regulation in India's property sector has resulted in buyers in India often being overcharged, misled or sold homes that have been built illegally by unscrupulous brokers.

"Some brokers are taking money, but they do not have any knowledge," said Yashwant Dalal, the president of the Estate Agents Association of India. "Previously some brokers cheated the end users."

India's Union Cabinet earlier this month approved the long-awaited Real Estate (Regulation and Development) Bill 2013, paving the way for a real estate regulatory authority to enforce new rules for the sector. The bill -- which still has to be approved by parliament -- proposes that real estate agents that "have hitherto been unregulated" would be required to register, "thereby leading to curbing money laundering," according to a government statement.

"We feel that if the regulations come, it is welcome, because these small types of brokers will vanish," Mr Dalal said. "Nobody will take them as their agent."

Currently, there are no regulations governing who can serve as an agent.

"A small shopkeeper says: 'I am an estate agent.' A lawyer says: 'I am an estate agent.' A milkman says: 'I am an estate agent.'" Mr. Dalal said. "So you see there's no professionalism in this business."

The bill only applies to the residential sector. Other proposed measures include mandatory registration of projects and providing a platform for dispute resolution.

"Real estate agents [are] not to facilitate the sale of immovable property which are not registered with the authority required," according to the government statement outlining the bill. Agents have an "obligation to keep, maintain and preserve books of accounts, records and documents, [an] obligation to not [be involved] in any unfair trade practices," the statement added.

VK Sharma, the managing director and chief executive of LIC Housing Finance, one of India's biggest home loan lenders, said that the regulations were much needed in the property sector.

"Fly-by-night operators will find it difficult," he said.

Buyers would benefit from the regulations, says Anuj Puri, the chairman and country head for Jones Lang LaSalle India.

"As and when the bill gets enacted, it will look to provide considerable relief to the ordinary buyer and investor who goes through innumerable obstacles when buying a property and at times is duped by small developers, builders and brokers," Mr Puri said.


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