April 9, 2015 1:19:57 am
After several years of discussions and deliberations, the Union Cabinet on Wednesday gave its nod to the Real Estate (Regulation and Development) Bill 2013 that not only seeks to protect the interest of home buyers but also looks to push developers into following some rules. While this much-needed bill, which will provide protection to consumers making their biggest investment, awaits Parliament’s nod, Sandeep Singh explains its key proposals and how it could impact various stakeholders, including the home buyers.
What are the important provisions of the bill?
The bill calls for registration of real estate projects and agents with the Real Estate Regulatory Authority that is to be established in each state/UT. It also seeks to establish a Real Estate Appellate Tribunal and a fast track dispute resolution mechanism. While in its previous form, the bill was applicable only for residential real estate, the one approved by the cabinet proposes to cover the commercial real estate as well. Among other things, it also has punitive provisions for those not adhering to the guidelines.
How does the bill protect home buyers?
The bill calls for not just timely execution of projects by developers but also looks to bar promoters from altering plans, structural designs etc without the consent of two-third of the allottees after disclosure. It also states that the developers will have to compulsorily deposit 50 per cent of the money received from the allottees into an Escrow account within fifteen days from where money can only be utilised for construction activity pertaining to that specific project. This will reduce the practice of developers using money received from allottees of one project to buy land for another project. Experts say this will also bring down cases of delay in project delivery. The bill also provides certain rights to home buyers. They can ask for stage-wise schedule of project from the developer and claim for possession as per the promoter’s declaration. They can also seek refund from developers along with interest in case there is a default from the promoter.
How does it affect developers?
The developers have been raising concerns over the provision to deposit 50 per cent of the money received from allottees into an Escrow account for construction activity in that project. While they argued to bring it down to anywhere between 20-30 per cent, some of them said that the land cost is the primary cost and if the government wants to lock 50 per cent for construction, they should facilitate funding for land purchase by developers.
Now, the developers will also not get away with delays in delivery, change of plan without taking consent of the allottees as the bill has put a provision for punishment where the developer can even face de-registration of the project following violation of the bill’s provisions.
Is your agent also regulated?
The unregulated industry till date has no criteria on who can act as a real estate agent. The bill now calls for real estate agents to be registered with the Authority. They will also be required to maintain books of accounts, records and documents.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.