In relief for home buyers, Rajya Sabha clears Real Estate Bill

The much awaited Real Estate Bill, which aims to protect the interests of buyers and bring more transparency to the sector was on Thursday passed in Rajya Sabha.

By: ENS Economic Bureau | New Delhi | Updated: March 11, 2016 9:20 am
real estate bill, real estate bill passed, rajya sabha, rajya sabha passes real estate bill, real estate, Real Estate Bill: The Bill provides that 70 per cent of sale proceeds will have to be kept aside by the developer in an escrow account (Source: PTI)

The Real Estate (Regulation and Development) Bill, 2015, which intends to protect home buyers, bring in transparency and plug the flow of unaccounted money into the sector, was passed by Rajya Sabha Thursday.

The Bill provides that 70 per cent of sale proceeds will have to be kept aside by the developer in an escrow account — an escrow is a financial instrument held by a third party on behalf of the other two parties in a transaction — and it can be utilised for land cost and construction of the related project. It, therefore, provides greater certainty to buyers that the money they pay to the developer will be utilised for development of the project where they have bought houses.

Read Also: Real Estate Bill passed: Here’s how it will help home-buyers

The Bill will help establish state-level real estate regulatory authorities and appellate tribunals to regulate transactions relating to both residential and commercial projects and ensure their timely completion and handover. It calls for disposal of complaints at both appellate tribunals and regulatory authorities within 60 days, thereby setting a timeline for resolution of disputes.

While the Bill has set a deadline for that, it also has provision for imprisonment up to three years for promoters and up to one year for real estate agents and buyers in case of any violation of orders of the appellate tribunals or monetary penalties or both.

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Even in case of delays, the Bill has sought to end the asymmetry which was in favour of developers. Now, both the consumer and developer will have to pay the same interest rate for any delay on their part.

While pricing of housing units has been a grey area, the Bill looks to clearly define the carpet area and states that this will form the basis for purchase of a house. It will, thus, eliminate the scope for malpractices in transactions.

Describing the Bill as the “need of the hour”, Urban Development Minister M Venkaiah Naidu, however, admitted the Bill “lacked clarity” on dealing with ongoing under-construction projects.

Responding to a clarification sought by a member in the House, Naidu said, “There will be no discrimination of any kind on basis of religion, region, caste, creed or sex and gender and we will include that in the rules.” He also said “there has to be single-window clearance for all approvals”.

As a rule, promoters will be required to register projects with the regulatory authorities disclosing project information including details of promoter, project, schedule of implementation, layout plan, land status, status of approvals, agreements along with details of real estate agents, contractors, architects, structural engineers etc. Naidu said that this will enable transparency, accountability and timely execution of projects.

The Bill, passed by a voice vote, got support cutting across political parties barring the AIADMK which questioned the Parliament’s legislative competence to pass such a legislation, arguing that land is in the State List of the Constitution.

Naidu said Parliament is competent to legislate on the important issue. He said the Union Government had taken the opinion of the Law Department. The Attorney General too, he said, had given his opinion.

The Bill, authored by the UPA government, underwent many changes over the last three years. One of the major issues was relating to the percentage of sale proceeds to be kept aside by developers in an escrow account. While the original Real Estate Bill (2013) mandated that 70 per cent or less, as notified by the state government, must be maintained in a separate account and used solely for construction, the NDA later proposed to reduce it to 50 per cent or less.

However, the Bill passed by the Upper House finally proposed that 70 per cent is to be kept aside and it can be used for both land cost and construction of the project.

The legislation also brought down norms for registration of projects to a plot area of 500 sq m or 8 apartments as against 4,000 sq m proposed in the draft Bill in 2013 and 1,000 sq m or 12 apartments suggested by the Standing Committee.

While some members demanded that the limit be brought down, Naidu said states will have the flexibility to bring down the threshold because the situation in different states will be different.

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First Published on: March 11, 2016 4:52 am
  1. A
    Abhinav Gour
    Mar 11, 2016 at 6:32 am
    Wow at last congress shows some consideration for d people dey govern. Thank u sonia madam for having mercy on us. Plz do indins a favor by grabbing pappu and getting out of india
    Reply
    1. A
      Aap
      Mar 11, 2016 at 2:42 am
      Good news. Something happening in the interest of people.
      Reply
      1. C
        crickin
        Mar 10, 2016 at 3:17 pm
        Ping a bill is just not enough. It will good if RERAs are enforced strictly. Let them estab one such office in each MLA consit. Financial transactions of real estate should go through newly setup office. Buyer, Seller and Bank exchange funds thru RERA; there are so many cases where real estate goons deceive and run away with money. That is the biggest worry in any real estate transaction, whether, seller will deliver or not and whether property is sold to many parties. Above issues are most important, new bill or existing ones should address them.
        Reply
        1. k
          karunakaran.a ex
          Mar 11, 2016 at 3:40 am
          sir even pending or cases having some problem in the court should be tugged into the ambit of new bill , venkaaih thank u
          Reply
          1. a
            anwarbashasheik@yahoo
            Mar 10, 2016 at 1:30 pm
            when LOKPAL bill will p
            Reply
            1. a
              anwarbashasheik@yahoo
              Mar 10, 2016 at 1:31 pm
              when this amendment in India, Election by individul candidate selection , not by party candidate
              Reply
              1. A
                Azizul Islam
                Mar 12, 2016 at 8:47 am
                It is very positive andprotected all the buyer of flat.
                Reply
                1. M
                  Mathews
                  Mar 11, 2016 at 4:28 am
                  Ongoing under-construction should also be brought under the ambit of RERDB.
                  Reply
                  1. R
                    rajan
                    Mar 10, 2016 at 6:26 pm
                    Where is Achu Mama for preaching freedom of press in this case, otherwise he was in front row to argue for Kanhaiya and Sindhu Suryakumar of Asianet news for press freedom. U abuse Hindus and Hinduism there is no harm. It is order of the day.
                    Reply
                    1. R
                      rajan
                      Mar 10, 2016 at 5:07 pm
                      Now real estate bill ped. Let Rahul take credit, like wise GST bill also be ped and help people to get rid of service taxes, a big burden, and let Rahul take credit of ping it, like he himself, has taken credit of rolling back PF loan interest. Good luck Rahul.
                      Reply
                      1. H
                        harpreet
                        Mar 11, 2016 at 2:12 am
                        Is it applicable to existing projects as well ?
                        Reply
                        1. K
                          Keerthy Naik
                          Mar 11, 2016 at 1:45 pm
                          Hope goverment makes many more changes in the judiciary for common man. Today every common man in our country is spending his money for fees and housing and both the sectors are corrupt. At last a great relief for home buyers.
                          Reply
                          1. K
                            kulaputra kulaputra
                            Mar 11, 2016 at 12:20 am
                            Delhi is the least productive and the most disruptive part of this country
                            Reply
                            1. K
                              kulaputra kulaputra
                              Mar 11, 2016 at 12:23 am
                              Not sure if LOKPAL is really good. See what is happening in Karnataka - a functioning toothless Lok Ayukta was corrupt. He was using this for extortion (through his son) and cases are being filed against him. Then we need Lokpal to watch for Lopkpal. We need Lokpal cubed to watch Lokpal squared ad infinitum. The only achievement of UPA was in recognising that this is not a viable bill and standing upto AK 47.
                              Reply
                              1. K
                                kulaputra kulaputra
                                Mar 11, 2016 at 12:20 am
                                Please - even a donkey with training and advisors can do better and that is an insult to the donkey
                                Reply
                                1. K
                                  kulaputra kulaputra
                                  Mar 11, 2016 at 12:20 am
                                  What world are you living in ?
                                  Reply
                                  1. K
                                    kulaputra kulaputra
                                    Mar 11, 2016 at 12:27 am
                                    Great poetry Mr. Basant. Congratulations on your penmanship
                                    Reply
                                    1. K
                                      KS KUMAR
                                      Mar 11, 2016 at 2:43 am
                                      It is strange to see that congress supporters praise Rahul when congress disrupts house and also when congress does its duty in discussing and ping legislations.
                                      Reply
                                      1. K
                                        Kumar
                                        Mar 15, 2016 at 3:17 am
                                        This bill is nothing but to include additional authority for making bribe from builders.. 2-3 years span all small builders would vanish and all big developers would push apartments price sky rocket.......This is Just another game playing by big builders to vanish small developers....Finally all burden would land up in buyers court....This bill may protect buyers in short term but definitely affect the buyers in long term..
                                        Reply
                                        1. K
                                          Kalayata Maha
                                          Mar 10, 2016 at 12:05 pm
                                          Great job!
                                          Reply
                                          1. M
                                            Mohandas
                                            Mar 11, 2016 at 4:28 am
                                            Relief happen only when there is no black money involved..Anything that the builder would comply will be based on what bank cheque being given as price. Unaccounted money will flow as usual and no protection over it !
                                            Reply
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