Real Estate Bill Gets Ready for Approval
The Real Estate (Regulation & Development) Bill, 2013, drafted by the last union government has undergone a few changes and is now in final stages of being presented for approval by the present government. The bill is expected to be soon taken up by the cabinet for approval. The expectation of the bill becoming law soon comes as a relief to home buyers.
The proposed changes have been welcomed by several industry experts. According to experts, this is a positive development and a huge step towards setting up a real estate regulator in the country. There are also a few experts who raised concerns about the bill not addressing the accountability of development authorities.
The changes
There are two important changes that were proposed by the union ministry of housing.
1) Bringing down the percentage of receivables from the earlier 70 per cent to 50 per cent from home buyers that has to be kept in the escrow account for the purpose of construction. This means that developers will have access to 50 per cent of receivables from allottees for purposes other than construction. According to experts, this makes sense as the construction cost as a percentage of total development is shrinking with increasing land costs. They also point out that the percentage should not be uniform for all cities. Instead, it should be lower for tier-I cities and higher for tier-II and tier-III cities. There were also other suggestions made by experts.
2) The second is to bring the commercial segment of real estate sector within the scope of this bill. The bill was earlier restricted to regulating only the residential segment. Experts have backed this move by the ministry, as this will give some comfort to institutional investors in commercial projects. They also suggested that this move should be balanced and fair to both customers and developers.
Experts also point out that authorities play an important role in giving approvals and hence, should be accountable. They say that the bill should address this accountability.
A parliamentary panel has asked the union ministry of housing and urban poverty alleviation to bring the bill soon to the parliament for its passage.
