Real Estate Regulation and Development Bill 2013, aims at increasing transparency within the Indian Real Estate Market. Its is being expected that it will bring some relief to real estate buyers and investors and will also bring down the rate of complaint cases against developers on various issues by buyers.
Let us examine what this new real estate regulatory bill has got in its latest version :
Emphasis on adherence to specifications and timeliness : Once the Bill gets enacted, it will provide considerable relief to the buyer who faces innumerable difficulties and at times even gets duped by developers and brokers. By imposing strict regulations on the promoter, the Bill looks to ensure that construction is completed on time, and on completion the buyer gets a property that matches the promised specifications. The Bill would make it obligatory for the developer to disclose minute details related to the project on the company website. Details of the project like the layout, the number of plans the developer is planning to sell and even the amenities will have to be uploaded on the website. The Bill also seeks to prevent developers from making misleading claims that do not match the actual development on the construction site.
Mandatory disclosure of project details: The Bill will make it mandatory for developers to disclose details, including minor ones, about their projects on the company website. The details will include specifications, such as the layout plan, carpet area of each dwelling unit, number of units in the project, the amenities being provided, and the approvals received for the project from various authorities. Such disclosures will make it difficult for developers to make ad hoc changes to their project plans at a later stage of development.
Developers will also have to specify the carpet area of each apartment. Selling on the basis of the ambiguous super area will no longer be permitted. Periodic updates on the stage of development that the project has reached will also become mandatory.
Moreover, in case there is a major structural defect or deficiency in the development or services offered and this is brought to the developer’s notice within one year by the buyer, the developer will have to rectify those defects without levying further charges.
Separate accounts for each project: The Bill also makes it mandatory for developers to maintain separate bank accounts with scheduled commercial banks for each of their projects. At least 70% of the corpus raised for the project from buyers (at intervals) will have to be deposited within 15 days of realisation in the account. Developers will have to channelize the money to meet the costs of that particular project. Diversion of funds from one project to another will not be permitted.
Misleading buyers will invite punishment: Developers will be prohibited from advertising or marketing their projects before getting all the necessary clearances and obtaining a certificate of registration from the authority. Now due to this, developers will not be able to collect funds from buyers before they have obtained all the necessary approvals.
The Bill states that if any developer wilfully fails to comply with or contravenes its provisions, he will be punished with imprisonment for up to three years, or a penalty that may extend to 10% of the estimated cost of the project, or both. Developer will have to compensate the buyer who incurs a loss on account of advance payment based on false information contained in the developer’s advertisement. “The regulatory authority will determine the compensation amount.
Cancelling a sale becomes difficult: Developers will not be allowed to cancel an agreement for sale unless they have sufficient cause to do so. The developer will need to give due notice to the parties to the agreement. He will also have to refund the amount collected along with interest, as prescribed.
Licences compulsory for realty brokers: The Bill also makes it compulsory for real estate agents to register and get licences before they begin to conduct business. This is being considered as a positive step by the government which will make real estate broking an organised profession. According to experts, the government should introduce more entry barriers so that only serious players get into the field. There should be a licence fee or a registration fee before someone can conduct this business. This will encourage only genuine brokers to enter the profession. Such serious professionals will study a developer’s project thoroughly before deciding to sell it to clients.
Data & Image Courtesy- Economic Times
Alok Kumar Upadhayay