However, this news did give me a strong feeling of deja vu. When I googled the phrase ‘India real estate regulatory bill’, I came across a newspaper article from 2006 saying that a real estate regulatory bill was expected to be passed in the 2006 winter session of Parliament.

I also came across another article from 2008 that said a real estate regulatory bill was expected to be passed in the 2008 winter session of Parliament. Not just that, I also also came across a draft of a model bill dated September 2009 with a covering letter from a government official attached.

The letter said that the bill should be put up on the web by November 9, 2009, and comments invited from the public. So, I wouldn’t keep my fingers crossed too hard.

Nonetheless, if and when this bill does become a law, it will be a huge improvement for house-buyers in India. Many, if not most, of the problems associated with buying a house at every step could be solved substantially.

For example, right at the beginning of the process, buyers face the problem of getting trustworthy information about the identity of the promoter and basic facts regarding the legal and approval status of the land and the project concerned.

The new law will mandate that each project be registered with and approved by the Real Estate Regulatory Authority and that all information filed with the authority be made available on its website.

No project can be announced or advertised before this registration. This alone will be a huge impediment to so many unhealthy practices.

The draft bill also mandates that the developer stick to the announced specifications and plan, and it lays down penalties if they don’t. Currently, these things are just part of a one-sided agreement that developers typically present to buyers as fait accompli.

Around the country, buyers’ biggest troubles arise from long delays and from developers transferring money from one project to another. The new law tackles this. Registration of a project is for three years and is then extendable for specific reasons twice for one year each. After that, the law allows for what appears to be a handover of the project to some other entity like an association of the buyers.

As far as fund diversion is concerned, the draft law is less than satisfactory. It mandates that 70% of the funds taken from buyers be kept in a separate audited account and paid out only for project expenditure. This is strange, because the 2009 model law said that 100% of the funds should be thus isolated.

Real estate developers in Noida, such as ATS Infrastructure, The 3C Company and Earth Infrastructures, which have about 11 residential projects between them in the city and its surroundings, have either bought land or signed joint development agreements in Gurgaon over the last six to eight months.

The development underscores the problems the real estate sector has been facing in Noida since May this year when farmers’ protests over low prices for their land snowballed into a political issue, leaving projects and buyers stranded.

“Noida Authority now has no land left in its bank to sell to developers,” said Shiv Priya, executive director at Amrapali Developers, a real estate firm scouting for land in Gurgaon. According to property research firm PropEquity, Gurgaon registered a rise in sales of residential units at a time when the market was down in most parts of the country.

Home sales in Gurgaon in the July-September quarter rose 34% from the year-ago period while that in Noida dipped 36%. “The sentiment of buyers has been affected in Noida because of which sales have fallen,” said Anshuman Magazine, managing director of CB Richard Ellis, a commercial real estate services firm.

Developer ATS recently bought a 14-acre plot of licensed land in Gurgaon’s sector 109 forRs 150 crore and signed a joint development agreement with the Chintels group for another 10-acre plot in sector 106. Similarly, 3C Company has signed an agreement with Orris Infrastructure to jointly develop a 47-acre plot in Gurgaon’s sector 89. 3C, which was active only in Noida until now, is planning a group housing project there.

Gurgaon, which is on the southwest of the national capital, had wooed the information technology industry with its gleaming buildings and swanky malls in the late 90s. “We also got a good feedback from many of our existing customers about setting up a project in Gurgaon, which is why we have signed a joint development agreement,” said Brijesh Bhanote, director, sales and marketing, at 3C Company.

There is no new prime land available in Noida, he added. Anckur Srivasttava, chairman of property consultancy Gen-Real Property Advisers, said developers are waiting for the political uncertainty to reduce post state elections next year. Sales of residential apartments in Noida plunged after angry farmers started blocking housing projects.

The agitation, which started in a certain area of Greater Noida, became a larger movement with farmers across the city seeking higher compensation. The issue was settled after a high court ordered the city development authority to pay higher compensation to farmers.

The authority was also asked to return 5% of the farmland it had acquired after March 1997. Property firm Earth Infrastructures, which operated mainly in Noida, has started a residential project on a 10.5-acre plot it bought in Gurgaon’s sector 112 earlier this year.

Group Bookings negotiates a group price with various builders and presents a discounted deal on its website. The potential buyers show interest in the deal to avail the discounted price. Group Bookings does not charge anything from the home buyers and all payments are made by the buyers directly to the builder.

“We have been providing the benefit of group discount to the customers, but now we have also convinced the builders to offer additional discount during the festival period, thus giving double benefit to the customers” said Sandesh Wadhwa, Business Head at Group Bookings. He negotiates with the builders on behalf of the home buyers to get maximum discount for them. He also added “We create a win-win situation for the builders as well as the home buyers. The buyers get double discount – festival discount as well as group discount and the builders are able to sell their inventory in bulk”.

“The commission had imposed a penalty on DLF Ltd. The nature of contravention of provisions is identical in its object and effect in the instant cases and emerges from the position of strength of DLF in the same relevant market. Therefore, it will not be appropriate to separately impose penalty again,” said the order. A DLF spokesperson said, “The company and its subsidiary will be filing an appeal with Competition Appellate Tribunal since the company believed it had a strong case.”

In an earlier case, DLF was asked to pay a penalty of Rs 630.44 crore, which was seven per cent of its three years’ average annual turnover. The Park Place Resident’s Welfare Association complained that DLF had diverted from the original stipulations of the agreement without keeping the buyers in loop. One such diversion was that of increasing the number of floors from 19 to 29 floors. It was also alleged the company, being a dominant undertaking, had devised a standard agreement, which was one-sided. Besides, the CCI found DLF had announced the project before getting necessary conditions and clearances and delayed the completion of the project.

Now, Ramesh, Shan, and Sayeed are software engineers looking for a flat in the same city. They know that the market isn’t doing too well and want to make the most of the situation to buy a house. They are not able to find a good deal in the current market scenario. How can the builder and potential home buyers like Ramesh, Shan and Sayeed get in touch with each other? For if they did, both builder and buyer could work out a mutually beneficial agreement.

Group Buying — a new trend in real estate PURCHASE

This is where the concept of group buying comes into the picture. In the last few years, group buying has been touted as a viable option for home buyers looking towards getting attractive discounts.

Here is how it works. Potential home buyers connect with one another through a common platform, usually provided by a third party or a group buying company (referred to as company hereafter), and form a group. The company then goes to the builder with a couple of orders and negotiates for possible discounts. The builder, sensing a good opportunity to sell a number of his flats, agrees to the discount. Typically, there is negotiation on discount but the discount is higher than what is offered in individual cases.

Then there are exclusive platforms such as Group Bookings (http://www.groupbookings.in), dedicated to group buying of homes, which help individuals join like-minded groups, who are interested in bulk purchases of certain properties. Once a group is formed, the company negotiates with the builder on the group’s behalf to get better discounts.

Advantages for the home buyer

The typical home buyer is in constant search for a better deal. As individuals, home buyers cannot negotiate for a better deal since it will not make economic sense for developers. The transaction cost with each individual will be high for developers. Also, an individual home buyer will not have bargaining power in a market dominated by real estate developers. By coming together and forming a group, the individual buyers can increase their bargaining power and hence will be able to bag better discounts.

For example, suppose a developer prices 2 BHK apartments in a residential complex at Rs 2,800 per square feet. The company can negotiate the price and bring it down to Rs 2,300 — Rs 2,700 per square feet for group buying of apartments. This discount will be much more than what an individual home buyer can negotiate with the builder.

Typically, the company which negotiates on behalf of the home buyers will probably be able to get a 4 per cent to 10 per cent discount on the price of the property. That is, if the price of your dream home is 40 lakhs, you can save up to 4 lakhs as discount.

Another advantage is that the group can share common services needed to complete the transaction such as a home loan, lawyer’s fee, and compliances. In these areas the individual home buyer as part of a group, will have more power for negotiation.

Advantages for the developer

Group buying offers builders certain advantages. Usually down payment in group buying is higher and hence developers who are just starting to build the complex get much needed cash. In the era of high interest rates and uncertain stock market, the higher down payment comes as a blessing for cash strapped developers.

Moreover, developers get a readymade market to sell their properties in bulk without spending anything in customer acquisition and marketing. This reduces their cost of selling. This savings can be passed to the home buyers in the form of extra discount. Group buying also helps developers sell the properties faster and focus on the next venture.

How does it work?

Let’s see how group buying works. Essentially, there are two ways:

Buyer initiates the deal

In this case, the potential home buyer posts his or her wish to buy a home in a project. The deal is then listed on the website and potential home buyers are encouraged to form a group if they want to buy a house in the same housing complex or from the same real estate developer. The home buyer can also visit the office of the company and get the required information.

Once the group reaches the critical number, the sales team contacts the home buyers, aggregates the demand and submits the bid to the builder.

The deal is then negotiated, and finalised. The home buyers get the agreed group discount.

Broker Company initiates the deal

In this case, the company posts a potential housing complex that will come up or an existing one. The deal is displayed with discount on offer at the website of the company. The buyers are encouraged to form a group to avail the discount.

Once the group achieves the critical number, the company submits the bid to the builder. The deal is then negotiated, and finalised. The home buyers get the agreed group discount.

Important Points

While as a home buyer you need to consider all important aspects typical to a home purchase process, you have to consider the following additional points:

The broker company is likely to charge for the services. The charges could be up to 1 per cent of the price of the property. The charges vary with brokers though and hence you should compare and check with companies that provide group buying. You should factor these charges to the total cost of buying your home. Usually charges will only work out to be lesser than the incremental discount you get from group buying. In some cases, the group buying company doesn’t charge anything from home buyers but gets its service charge from the developer.

You may have to shell out higher upfront or advance money to a developer. The money asked upfront is usually more than what you pay in case of an individual buy. The amount could be twice as much.

Building critical mass of people to buy houses in a specific location and housing complex takes time. The buyers should like the place; should have the same requirement; should have convenience of communication to their office, and should meet many more requirements of individual buyers. Assimilating all such buyers to form a group will take time and hence home buyers should be ready to wait for the deal to materialise.

Last and most important, read the deal and all its features carefully. In a group buy, most of the buyers think that others have read the terms and conditions and hence do not bother to read it. Do not make such mistakes. Ask if you do not understand some features. This is the most important aspect that you need to provide maximum attention to! When it comes to doing the due diligence, think like an individual not as if you are the only one buying the home and take utmost care to ensure the credibility of builders, papers, and possession.

Infact group buying websites like www.groupbookings.in are also offering discounts as high as 10 to 30% on apartments in various new projects. It has tied up with a number of developers and offers exclusive real estate deals on its website. The buyers show interest in the deal they like and groupbookings.in agregates the demand from individual buyers to form a group. As a result all the group members are able to buy at a huge discount.

Investors have played a major role in the realty market in the last three years because they have cornered more than 50% of the properties booked during the period.

Unlike end users, who pay in installments, investors book flats in the pre-launch stage by paying 50 to 100% of the cost thus providing capital to builders. Their aim is to resell the property and make profits.

These days, investors are also trying to sell their properties so that they can make profits while the rates are still high even if they sell at rates lower than the market price.

In Bandra, investors who have booked flats in a project by a leading infrastructure group are quoting Rs18,000 a square foot when the prevailing rate is Rs23,000.

Builders also agree that a correction in realty rates is expected. In such uncertain times, website like www.groupbookings.in prove beneficial for the customers as they can buy the projects at highly discounted prices.

The Greater Noida Authority, locked in a standoff with several villages in Noida Extension over acquisition of farmland for constructing apartments, succeeded to end the deadlock with one village on Saturday. Buoyed by the breakthrough in Patwari village, the authority said it was a matter of time before other villages turned around.

Squaring off with the Greater Noida Authority, at least 16 villages have gone to the Allahabad High Court (HC), demanding that farmland acquired there for constructing flats be scrapped, halting work at nearly 50 housing projects valued at Rs 37,500 crore.

The villagers have argued before the court that the land acquisitions should be scrapped as the authority neither paid them the compensation it promised nor fulfilled several other assurances, including handing them plots in return for their land.

On July 26, the Allahabad HC asked the farmers and the Greater Noida Authority to end the impasse out of court, adding that a larger court bench would hear the case on August 17 if, by then, a settlement is not reached.

The court order set off feverish negotiations by government officials with the farmers, culminating in Saturday’s breakthrough.

Under the deal struck with farmers of Patwari, they will now withdraw their case in court.

In return, the Greater Noida Authority agreed to pay an additional compensation of Rs 550 per sqm to the farmers. This is over the Rs 850 per sqm at which their lands were acquired in 2008.

The authority announced to give each farmer residential plots eight per cent the size of their acquired land. Earlier, it had promised to give plots six per cent the size of acquired land.

The plots will be at good locations connected by roads not less than 12m wide. Allotment will be done through a draw of lots in Lucknow.

The authority also agreed to a demand of the farmers not to acquire abadi ( inhabited) land and, if such land has already been acquired, return those to villagers.

Under the agreement, 10 per cent seats will be reserved for farmers’ children in all schools and colleges to be set up on their land. Concrete roads, sewerage network and other infrastructure will be developed in villages on a par with urban sectors.

The deal was brokered by Gautam Budh Nagar MP Surendra Nagar, Uttar Pradesh cabinet minister Thakur Jaiveer Singh and MLA D. P. Yadav, all from the ruling BSP. A press conference was addressed jointly by them along with MLC Jitendra Yadav, Greater Noida CEO Rama Raman and chairman Mohinder Singh to announce the deal.

“We talked to the farmers on all issues in a cordial and amicable manner to reach a consensus. We have agreed to almost all their demands and the farmers, too, are happy,” Mohinder Singh said.

“Their biggest demand was not to acquire abadi land, to which we agreed,” he added.

Nearly 250 farmers signed the deal with the authority. Government officials were confident that with Patwadi farmers on their side, other villages will follow suit in the coming days.

The authority will now submit a copy of the agreement before the Allahabad HC.

Emerging out of the meeting, Patwari chief Resh Pal Yadav said: “We are happy with the deal. We did not want buyers to suffer who have invested huge money in flats. But we were under no pressure to reach a deal.”

Several Patwari villagers, however, claimed the deal was inked by farmers who were not the litigants and the actual petitioners were not taken onboard.

Suresh Yadav, a farmer, said: “We are not at all happy. We are holding a panchayat tomorrow to discuss the situation. Whatever has been done has been done under political pressure.”

DLF Chairman Kushal Pal Singh termed the ongoing farmer agitation over land acquisition a ‘revolution’ and said farmers whose land is acquired must be paid the potential value of their property and not merely the current market value. But the head of India’s largest real estate company said he was not in favour of retrospective compensation as it would set a grave precedent for all land deals across the country.

Land acquisition for industrial and residential projects has become a controversial issue with farmers demanding higher compensation in Noida Extension, on the outskirts of Delhi, which they claim was acquired at throwaway prices under the pretext of urbanisation. Last week, the Allahabad High Court directed that land in Noida Extension be returned to farmers, sending ripples across an industry hit by high home loan rates and low sales.

“I believe this agitation will eventually settle down. Two revolutions are happening today. One is a revolution related to transparency and the second is related to acquisition of land. Without land, how can you have development of roads, highways, townships, etc? But it must be done based on rationality. If the government is able to settle these issues in the new Bill (upcoming land acquisition Bill), then we will be a winner, otherwise we will continue with the problem,” Singh said in an exclusive interview.

He blamed people living in cities who make laws for the poor without understanding their issues. “All policy framework since Independence has been done by urban people. There is no true representation from rural areas.” Singh urged the government to make rehabilitation integral to land acquisition in the new Bill and said instead of a one-time payment, an annuity-linked payment system stretching over a period of time should be devised.

“Land is an emotional issue for the farmer in India. You cannot deal with his reaction by giving him money. Pay the money, but pay the right money,” he said, pointing out that in Haryana farmers receive annuity for 30 years. Singh suggested that land acquisition should be left to private builders, and the government should intervene only to acquire those pockets where farmers are not willing to give up land.

The court order came in some 250 petitions that were clubbed as they involved hundreds of farmers spread across 10 villages where some 3,000 hectare of land was acquired by the Greater Noida Authority.

The petitioners had accused the Greater Noida Authority and the state government of arbitrarily bypassing the prescribed procedure for acquisition by unlawfully using an “urgency” clause, when the land in question was actually given away to builders and developers to build swanky residential complexes.

A division bench comprising Justice Amitabh Lala and Justice Ashok Srivastava said that the farmers and the administration were free to hold fresh negotiations and strike a deal, if possible by August 12.

“In case no settlement comes through by August 12, then the matter would heard by a larger bench with effect from August 17″, a senior court official told reporters in Allahabad.

Alleging payment of very low compensation against their land, farmers claimed that even as their land was taken away at a throw away price, builders and developers were making huge profits by charging exorbitant rates from applicants.

They had taken the cue from a few recent orders of the court to return the acquired land to the farmer in certain other parts of Greater Noida.

There too the administration had applied the “urgency” clause to do away with the proceedings under section 5 of the Land Acquisition Act that entitles the land owner to raise his objections against the acquisition.

Meanwhile, an impleadment application moved jointly by a number of builders and developers who wanted to be heard by the court before it took any decision on the issue, was turned down by the High Court.

The order leaves in the lurch thousands of applicants, who had invested their lifetime savings in the housing projects.

The bench comprising justices R K Agrawal and Sunil Hali released the petitions filed by farmers of Deola village and referred the matter to the Chief Justice with the request that it be placed before the “appropriate” division bench.

The petitioners had moved the court with the contention that 107 hectares of their land had been acquired by the state government, which had denied them an opportunity to raise objections by invoking the “urgency clause” thereby depriving them of adequate compensation.

Meanwhile, hearing on petitions of farmers from nearly a dozen villages of Gautam Buddh Nagar, challenging acquisition of about 3,000 hectares of land, is likely to commence before a division bench headed by Justice Amitava Lala later today.

An application has also been moved by the “Noida Extension Flat Buyers’ Welfare Association”, formed in the wake of recent judgements quashing acquisition of hundreds of hectares of land in the area, which has sought to be made a party in the case.