Haryana shows way in land deals

Amrita Singh / TNN / Sep 14, 2008, 01:51 IST

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The new Haryana Regulation of Property Dealers and Consultants Bill ensures accountability for unscrupulous brokers. It seeks to implicate them in legal suits if the deal is shady.

Until last week, starting a real estate business in Gurgaon was simple. All you had to do was put up a signboard. There were no laws governing your business and no licences were needed.
Small wonder then that the movie Khosal ka Ghosala, in which a fly-by-night property agent cheats Anupam Kher of his life's savings, was set in this outpost of Delhi.
It shouldn't be this way. With Gurgaon becoming the hub of corporate India, property is one of its most thriving sectors. According to unofficial estimates, 10,000 brokers are dotted around the 2,600 sq km that is Gurgaon. It might well be the Indian city with the highest number of brokers per sq km.
This may be about to change because the Haryana Assembly last week passed a law to regulate the burgeoning but unregulated property business. Estate agents will now need a licence from the Haryana Urban Development Association. Their transactions will come under scrutiny. Property consultants Cushman and Wakefield say the new law "will cut down speculation and make deals more transparent."

It's a win-win situation for property agent Kapil Arora, who has been in the trade for 30 years and seen profits dip because of fierce and unregulated competition. "As the industry is fiercely competitive, issuing licences to property agents will bring in some self-regulation and prevent others from resorting to unscrupulous measures, like selling uncleared deals to make a profit," he says.
Regulation, he says, could wipe out at least half of Gurgaon's army of property agents. But he cautions that it needs to be done right. "Licensing is a welcome step, but I also think there should be some criteria for issuing it like in the US, where only after passing an estate licensing exam can one become an estate agent," says Arora. Haryana estate agents, he says, currently have little idea about documentation and often leave errors in the sale deed itself. This could store up problems in future for the hapless house-buyer, he says.

Cushman and Wakefield says licensing would reduce unfair practices because the new law makes it illegal for property agents to acquire property. "Often, agents buy property and take on the role of sellers instead of just being agents, leading to unnecessary speculation in the market," says a spokesperson.
But will the new, transparent way of doing deals affect property prices? It would certainly make things clearer. At present, it's difficult to find out a property's exact sale price. Prospective buyers have no option but to trust the broker and his quoted price. But licensing means buyers can check the quoted price with the registrar's office by simply quoting the broker's licence number and cross-checking the last few transactions on the property. But Arora believes this may not help much. "There will surely be more accountability, but I am not too sure if it will shift the flow of black money from the property market. At most, it will act as a deterrent for brokers so they don't get involved in shoddy deals."
Many others are pessimistic too. DPS Rajesh who is fighting a legal battle to take possession of his flat along with hundreds of others who were duped into investing in defunct societies, says brokers should be outlawed. Why not buy the property straight from builders, he asks. "Brokers never tell you anything clearly, they give you incomplete information and often, are interested only in making money," he says.
Despite the pessimism, however, it is clear that the new Haryana Regulation of Property Dealers and Consultants Bill ensures accountability for unscrupulous brokers. It seeks to implicate them in legal suits if the deal is shady. The Bill, says Cushman and Wakefield, will go a long way in regulating the high-handedness of brokers and should be implemented elsewhere in the country as well.
As it happens, the Urban Development Ministry drafted similar legislation to regulate estate agents in Delhi two years ago. But, the bill is yet to see light of day.
Haryana has shown the way.
amrita.singh@timesgroup.com

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