Real Estate Bill Gets a Green Signal

“A Bill to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Authority and for matters connected therewith or incidental thereto.”

Amidst several unprecedented proceedings in the Winter Session, the Union Cabinet on Wednesday wrote another page in the history of real estate sector. In a landmark move, incorporating as many as 20 major amendments, the Cabinet finally gave a green signal to the Real Estate Regulatory Bill that aims to safeguard consumer interest. These changes were based on the recommendations of the select committee of Rajya Sabha that had examined the bill.

Though the Bill still has to take a fairly long journey as it needs to be passed by the Parliament, there is a general feeling in the market that it will be a booster shot is promoting real estate growth.

So, what does it mean?

-Mandatory Registration of Projects with the Real Estate Regulatory Authority established under this Act.

– Mandatory disclosure of all registered projects with details pertaining to the developer, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer etc.

-Builders will not be able to change plans and design without consent of consumers

-To bring a plethora of projects under the regulator’s purview, the bill now mandates projects on 500 sq. mt. of area or with eight flats to also be registered with the regulatory authority instead of 1,000 sq. mt. as proposed earlier.

– Carpet area has now been clearly defined to include usable spaces like kitchen and toilets to make it clear. Garage is now to be kept out of the purview of definition of apartment and is separately defined.

-Builders will now have to deposit at least 70 per cent of the sale proceeds, including land cost, in a separate escrow account to meet construction cost. As per the earlier proposal, it was 50 per cent or less of sale proceeds.

-Formation of allottees associations is now mandatory within three months of allotment of majority of units in a project so that buyers get to manage facilities in the housing project.

-The revised bill now includes an enabling provision for arranging insurance of land title, which is currently not available in the market. This will benefit buyers and sellers both in situations where the title of the land is held invalid.

– For settlement of disputes, fast track dispute resolution mechanisms will be established through adjudicating officers and Appellate Tribunal.

-Appellate tribunals will now have to adjudicate cases in 60 days as against 90 days proposed earlier and Regulatory Authorities to dispose off complaints in 60 days.

Penalties

– Builders will now have to pay equal rate of interest in case of default or delays as home buyers. For structural defects, liability of builders has been increased to five years, which was earlier two years.

-For redressal of grievances, the bill allows aggrieved buyers to approach 644 consumer courts that are available at the district level instead of only the real estate regulatory authorities proposed to be set up under the bill, mostly in capital cities.

– A new provision has been created for imprisonment up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of Appellate Tribunals or monetary penalties or both.

For Detailed Report, Click here