The Union Cabinet today approved the bill to set up a regulator for the real estate sector with provisions for a jail term for the developer for putting out misleading advertisements about projects.
The Real Estate (Regulation and Development) Bill,approved by the Cabinet,seeks to provide a uniform regulatory environment to the sector.
It also intends to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities.
The Bill has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction,sources said.
The proposed legislation has tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of the actual site.
Failure to do so for the first time would attract a penalty which may be up to 10 per cent of the project cost and a repeat offence could land the developer in jail.
Union Minister of Housing and Urban Poverty Alleviation Ajay Maken had been making efforts to get the Bill approved by the cabinet. It had been taken up by the Cabinet on April 2 but was put off due to differences.
The bill also seeks to make it mandatory for a developer to maintain a separate bank account for every project to ensure that the money raised for a particular task is not diverted.
The proposed legislation provides for clear definition of ‘carpet area’ and would prohibit private developers from selling houses or flats on the basis of ambiguous ‘super area’.
Under the proposed new law,builders will be able to sell property only after getting all necessary clearances.
Developers will also be barred from collecting money from buyers before completing all necessary permits to start construction on the project.