The cabinet has amended a bill to regulate the real estate sector, protect home buyers and curb undeclared “black money” in property markets that costs the exchequer thousands of crores in lost taxable income.
The new rules apply to residential and commercial developments. Both residential and commercial projects come under regulator’s jurisdiction.
The bill makes it mandatory for all projects and brokers to be registered with a real estate regulator who will oversee transactions and settle disputes. Regulator has to clear cases within 60 Days.
The decision by Prime Minister NarendraModi’s government to amend the bill, which was submitted by the previous government in 2013 but not passed by the Rajya Sabha, aims to boost investor confidence and stamp out illegal practices.
During recent years, sluggish economic growth and delays in getting approvals stalled several real estate projects, leaving buyers waiting for their homes and developers holding high debt. It will lead to more transparency in Indian real estate market.
Vendors in the real estate market often demand part payment in black money, making many ordinary people party to corruption and excluding some of the emerging middle class from the market.
A key provision of the amended bill makes it mandatory for developers to put aside 50 per cent of the money collected from buyers during pre-sale of homes, and use that only for funding construction of the project.
Several projects in India have been delayed in recent years after some developers diverted funds raised for one project to another. That left them out of pocket to complete construction and resulting in buyers still waiting for their homes.
The bill seeks to divert this flow of funds, and impose penalties, including de-registration of the project and other fines in case of a breach.
Other direct benefits to real estate buyers :
Carpet area as unit for enticing an selling. Earlier projects were being sold at super area and were being charged for the same. Now consumer has to pay only for the carpet area of the apartment.
Consent of 2/3rd allottees would be required by the developer to bring any change in the plan or design.
In case of any structural defect in the building, the real estate developer will have to rectify those defects within 2 Years.
All ongoing projects which have not got completion certificate have been covered under this jurisdiction.
A regulation for real estate agents has also been proposed in real estate regulation bill.
Real Estate Professional