Real Estate Regulation & Development Bill, long awaited since 2013, got approval nod from the Union Cabinet on 7th April 2015. The motive of this bill is to protect buyers by setting up regulatory bodies at the Centre and states to ensure transparent business practices in the country’s unregulated Indian real estate sector however it watered down two crucial provisions which will allow builders to keep only half the money they receive in advance from buyers against the earlier proposal for setting aside 70% of the funds in a special account.
The revised real estate bill has got its pros and cons. It includes provisions to protect buyers, including an additional window to approach consumer courts for their grievances, it has deleted a clause that provided power to the appellate tribunal to punish the director, manager, secretary or any other officer of a real estate company for contempt of not complying with the orders or direction of the regulator.
READ BENEFITS OF REAL ESTATE REGULATORY BILL
Sources says, this dilution has been defended alot by officials as well the real estate lobby has tried too hard to push for it. Ministry officials have defended the provision, saying the cost of land accounts for about 25% to 50% of a project cost and the developers have already paid this amount in advance even before the start of a project. Hence it is a reasonable stipulation.
The proposed bill will be applicable to commercial real estate besides residential projects. Moreover, the ongoing projects that are yet to receive completion certificates have been brought under the purview of the bill and such projects will need to be registered with the regulator within three months. However, the real estate developers have opposed for it. READ HERE
Promoters will be required to compulsorily deposit 50% of the amount collected from consumers in a separate account in a bank within 15 days to cover the cost of construction.
Penal provisions under the proposed law also include payment of 10% of project cost for non-registration and another 10% of project cost or three-year imprisonment or both, if still not complied with.
For wrong disclosure of information or for not complying with the disclosures and requirements, payment of 5% of project cost will be imposed. Regulatory authorities will also have the power of cancellation of registration in case of persistent violations and decide on the further course of action regarding completion of such projects.
There are several other positive aspects of the revised real estate regulatory bill, which includes mandatory provision of getting two-thirds consent of the buyers to change plans and structural designs and reining in the real estate agents for non-compliance of the orders of regulatory authority. The government targets to clear this bill during the second half of the Budget session.
The bill was introduced in the Rajya Sabha last August and referred to the parliamentary standing committee. Though the committee had made several recommendations, particularly in favour of consumers and greater check on unscrupulous developers, the housing ministry had rejected most of them.
These include checking the antecedents of project’s promoters before their registration is approved, and ensuring that developers who have defaulted in two earlier cases be blacklisted.
But the ministry rejected this, arguing that such a provision will work as a deterrent for the sector. The panel had also suggested the promoters be made to enclose names of contractors, architects and structural engineers, which was also turned down. The panel had also recommended all real estate agents involved in sale of secondary market projects also need to be regulated. But this proposal was also turned down by the housing ministry.
Source: Print Media
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