Gift For Land Sharks? Karnataka Government’s New Joint Venture In Construction Raises Eyebrows

The Karnataka government, comprising the Congress and Janata Dal (Secular) or JD(S), has come up with a plan to enter into a joint venture with private landholders in promoting real estate and construction. The reason being quoted is to provide homes to those belonging to the middle income groups. The Karnataka Housing Board (KHB) will soon invite expressions of interest in the joint ventures (JV), and a cabinet approval is in the offing as well.

State Minister for Housing and Urban Development, U T Khader, says that this will mean houses for many people who are struggling to get a roof over their heads as the JV will enable them to get it without much trouble. The Karnataka Housing Board will pick up the tab for all the clearances and paperwork. “The housing board will also create the layouts and also take up constructing the roads, providing electricity, water and drainage and will hand over the properties to those who wish to make their home in the layouts. There will be multi-storyed structures and also individual houses depending on their preferences,” Khader told Swarajya.

But why should the government get its hand into the tricky business of real estate and construction when ideally its role should be that of a facilitator and regulator and not a participant? When asked, Khader said, “it is an obligation to the society that the government has to take up, the JVs will be done on 50:50 ratio, the housing board will get to retain 50 per cent of the land as its share for developing the land, getting papers ready, and over and above, the property will be developed under the seal of housing board which makes it legal. The remaining 50 per cent will be retained with the land owner for selling. There will be no more instances of real estate operators taking the gullible home buyers for a ride with fake land records. The legal opinions on the land to be developed under the JV will be given by the top experts in the field, so the buyers have nothing to worry about.”

“It is a win win situation for all," he quipped.

Many real estate operators and developers are already scratching their heads and are looking for devil in the fine print. “On the face of it, the JV with housing board appears to be rosy, but many things might go wrong, we do not know if it will fit in the new Real Estate Regulation Act (RERA). There are elaborate provisions as per the RERA 2016 about commencement certificate, occupation certificate, the terms and conditions of payment and detailed notes on the expression of company, vendor and buyer. We still do not know if under the proposed JV, these things are taken care of, we do not know if the housing board can be a company as it is not been registered under the Companies Act but is a government body,” say the functionaries of the Confederation of Real Estate Development Agencies of India (CREDAI).

According to an estimate by the officials in the housing board, if this JV is workable many expanses of land that were not cleared for housing projects by the city corporations, town municipalities, urban development authorities will fall into the hands of Karnataka housing board. There are chances that the nonviable lands for development will be pitched again to the local regulator by the Karnataka Housing Board for clearances and with pressure from the government bodies, say the CREDAI functionaries. Clearances will be winched out of the local regulators with some arm twisting and this will be a highly ‘managed’ venture; many safety norms might also be given the go-by while developing a plot of land, says the same group, apprehensively.

The civic bodies not governed by the Congress in the state will be under tremendous pressure from the government to make way for legalising the lands which were declared not suitable for development. Another round of questionable denotification will be on the anvil, fear the civic chiefs.

The Housing Minister (UT Khader) is also the Chairperson of all the housing corporations and the KHB. “We are treading with extreme caution, we would not want unscrupulous elements from the real estate and construction fields to get the better of the joint ventures. The KHB will screen the land vendor for the credentials, encumbrances and titles, but still it is a multifarious process which is tricky and cumbersome. This is why there will be a battery of experts that includes document writers, advocates, bureaucrats knowledgeable in the field of land trading and development, and who will closely monitor the JV,” Khader told Swarajya.

But Khader appears to be innocent to the fact that he is dealing with land sharks within the coalition government. Within his own party there are ministers having large expanses of land and in the JD(S) there are established large scale landholders. “Due to the RERA many land sharks in both Congress and JD(S) were not able to pitch in their lands for sale or development. This was one of the causes for the dip in the real estate business volumes. This is a clear ploy to bring those lands into market again under the hand of authority,” say the sources in the Housing Ministry.

But is there a chance of RERA being circumvented? It cannot be, for RERA is the apex set of norms for all real estate transactions. There is no way even the KHB can circumvent it, but at this time when there is infighting within the coalition government, there could be political covenants between the coalition partners to get the JV going before the process for the 2019 elections begins.

One of the outspoken leaders of the Bharatiya Janata Party, Shobha Karandlaje, when contacted said, “it is not in the right spirit, why should a government body, KHB, get into a JV with private operators? I will get to the bottom of it.”