RERA-An Agent’s Perspective
By: Alok Gupta-President-The Estate Agents Association of India, Central Zone One
The Real Estate industry in India is the second largest job provider after agriculture in India. The Real Estate industry in India is expected to grow more than 30% in next ten years. Real Estate, despite being such a big industry in India, didn’t have any regulatory act for it so far. The long awaited RERA, The Real Estate (Regulation and Development ) Act, 2016 is now a reality. Although it may be a bit too soon to comment on it yet it definitely is a welcome move.
The sections 9 and 10 of the act cover the role of a real estate agent. It is definitely better to have some legal recognition of agents than none but, in order to fix the power, duties and responsibilities of an agent or a middleman in a real estate transaction, quite a lot more needs to be understood and then defined. I have been practising the profession of real estate broking for over two decades now and have always been advocating that this profession needs more recognition, more definition and is also required to be licensed or certified. As per my analysis, on a conservative estimation, the real estate broking alone is a Rs. 18,000 crores industry in India and there are over 5,00,000 real estate agents across India. Although it looks to be very big yet the Real Estate broking industry in India is less than 1% the size of the industry across the world. The RERA does speak of registering the agents but, at the same time, leaves a lot of other issues unaddressed. Prima facie reading the said sections of the act gives the impression that the act is only for the agents who are associated with the promoters or are involved in a sale transaction related to any new project. The scope of the act needs to be widened to resale transactions and also to lease and rent transactions.
The act needs to be enlarged to cover the real estate broking business in totality rather in a small bit. A lot of responsibilities has been attached and attributed to an agent but here, it needs to be understood that an agent is a mere facilitator. He is neither a part of the promoter nor is he an entity on whom a project depends. In such a situation pegging too much responsibilities on him would not only be unfair but could also be counterproductive for the industry, especially when his own limited interested in the deal is neither safeguarded nor taken care of. There are three independent parties in a typical new project sale transaction. One – the promoter, two – the middleman ( popularly known as the broker or an agent ), three – the buyer. The act seems to have considered the agent on the promoter’s side and seems to have been written as if there are only two parties in the deal. One, the promoter and the agent, two, the buyer while in some cases, rather in quite a lot of cases, the agent himself is the sufferer party. From the promoter’s side, an agent is asked to bring in customers, do a lot leg work, parrot out the project features to prospective buyers and in the end, he is not even paid his legitimate professional fees. From, the buyer’s side, an agent is supposed to get the lowest price, do a lot of running around, even is supposed to do the due diligence too and at the end of the deal, quite a few times, the agent again is left without his legitimate professional fees. All this happens when the deal is concluded smoothly. If, by any chance, the deal gets concluded after some bumpy rides, the agent not only loses his due professional fees but also is cursed to hell. Hence, there is an emergent need to define the role as well as the professional fees of an agent when he’s representing the promoter, when he’s representing the buyer and also when he’s representing the both. A similar definition of an agent’s role and fees is needed for transactions other than the sale transactions viz. leasing and renting.