WOULD HARSH RULES SANITISE THE REAL ESTATE MARKET?

The buzz around is that after politicians, builders are the most despised lot. Everyone has a story of someone who got a raw deal. The keys were handed over three years after the promised date; buyers had to cough up more midway, thanks to a clause that initially appeared insignificant; the redeveloped apartment had two-and-a-half bedrooms instead of three; and a year later, another 10-storied tower sprung up on the "open space", blocking the view or the sea — for which the owner, taken in by pictures on glossy brochures, had paid a premium. The list is endless. 

Some angry buyers move to court while others grudgingly accept what they get. A few years down the line, they stop cribbing as properties in the neighbourhood change hands for double the price they had paid. By then, they could be browsing another brochure that has found its way into the inbox, planning a second home that comes across as the only sensible, even if a little sticky, investment. 

The housing market is about spiraling rates that have priced out most buyers, ambitious developers who are answerable to no one, emergence of property as an asset class and mortgage installments becoming the dominant outgo in household budgets.

Like politicians, developers require no qualification: anyone with a claim on a slice of land can put out an advertisement to attract buyers. It's a business that employs millions and flourishes without a (proper) watchdog. Thus, any hint of a new law that assures fair deals and exemplary punishments that would be handed out by a new regulator is irresistible. 

But it won't be a cakewalk. Advocates of such legislation should be prepared for the tortuous road towards a well-regulated and cleaner property market.

First, home prices could go up in the short and medium term.

Second, corruption may rise as multiple agencies drag their feet on clearances. Developers may strike convoluted deals giving buyers the option to purchase later.

Third, disqualifying a shoddy builder could stall construction in all half-done projects and hurt genuine buyers. And, lastly, the validity of many regulatory actions could be challenged in higher courts. 

There would be hurdles on the way and unless there is a quick and effective mechanism to throw out unscrupulous developers and hand over unfinished projects to others for completion, harsh measures would backfire on home buyers. This could defeat the purpose behind an otherwise strong law.