A national real estate regulator with appropriate powers is a great idea whose time was long overdue as real estate sector in India contributes about 11% of gross domestic product (GDP). The Real Estate Regulation Bill was approved by the Union Cabinet on April 7, 2015.

The proposed Real Estate Bill to bring under its ambit commercial and all ongoing projects and also brokers promises much needed relief to harassed home buyers by ensuring greater accountability towards consumers, and to significantly reduce frauds and delays. The proposed legislation is expected to promote regulated and orderly growth of the real estate sector through efficiency, professionalism and standardisation.


The top five benefits

1. The Bill provides for mandatory registration of all projects with the Real Estate Regulatory Authority in each State. Real estate agents who intend to sell any plot, apartment or building should also register themselves with this authority.

2. It makes mandatory the disclosure of all information for registered projects like details of promoters, layout plan, land status, schedule of execution and status of various approvals.

3. It seeks to enforce the contract between the developer and buyer and act as a fast track mechanism to settle disputes.

4. Fifty per cent of the buyers' investment has to be deposited into an escrow account that would be used only for the construction of that project.

5. The Bill prohibits a developer from changing the plan in a project unless two-thirds of the allotters have agreed for such a change.


Good news

Home buyers have several reasons to cheer as it is expected to ease their concerns on delay in delivery and change in project layout among others. Developers are also expected to benefit as improved transparency and accountability will improve institutional funds flow into the sector.

The bill makes it mandatory for builders developing a project exceeding 1,000 square meters to register with the proposed real estate regulatory authority (RERA) before launching or even advertising a housing scheme. The punitive provisions include deregistration of projects. If the builder defaults on promises made at the time of the launch, the buyer can approach consumer forums. This is a major departure from the present where tales abound of harried and hapless home buyers who often find themselves at the mercy of builders. Time overrun in housing projects is almost taken as a given currently.

The number of tussles between home buyers and realty developers due to delay in project completion is likely to come down as the bill is making it mandatory for the builder to maintain 50% of customer advances in an escrow account within 15 days of receiving the money from buyers.


Transparency triumph

It is only fair that the disclosure by the promoter of the number of apartments for sale has to be based on carpet area, and carpet area has been defined. The buyer should know what he is actually getting and paying for. This standardisation is absolutely critical to reduce the asymmetry prevailing in real estate transactions.

Ongoing projects that have not received Completion Certificates have also been brought under the purview of the Bill and such projects will need to be registered with a proposed regulator within 3 months.

The states have to set up the regulatory bodies within a year of the Bill's enactment while also setting up a web based online registration facility within a further period of one year from setting up the bodies.

The penal provisions under the proposed law include a payment of 10% of project cost for non-registration and payment of additional 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. The Bill provides authorities the power to cancel project registration in case of persistent violations and decide on further course of action regarding completion of such projects.


Online system

An online system for submitting applications for registration of projects will be introduced within one year of the establishment. Regulator will have to decide cases within 60 days. Promoters will be mandatorily required to disclose all information regarding promoters, project, layout plan, schedule of development works, land status, status of statutory approvals, proforma agreements, names and addresses of real estate agents, contractors, architect and structural engineer.

The new amended Bill reads very positively for inducing transparency and better governance.




- by Ashok Kumar

Source :- DNA Property