Now a law to regulate the builder

Builders may finally be coming into the ambit of the law. In good news for property buyers, the government has decided to reform the unregul...

Builders may finally be coming into the ambit of the law. In good news for property buyers, the government has decided to reform the unregulated construction industry by making it mandatory for builders to register with a regulatory authority.

The legislation, tentatively called 8216;8216;Real Estate Management Regulation and Control Bill8217;8217;, will also spell out penal provisions in case the builder does not deliver in a declared time-frame.

The penalty can be in the form of fines, imprisonment or black-listing the builder. However, construction companies can contest these penal provisions with a designated appellate authority.

Government sources confirmed that the Urban Affairs Minister Ghulam Nabi Azad will bring in the legislation in the monsoon session of Parliament that will ensure that a builder will have to register and get approval of its development plans from the regulatory authority before a company advertises its constructions plans.

The government has been looking at ways to induce transparency and competitiveness in the unregulated construction industry, pegged at a whopping Rs 250,000 crore and growing at seven per cent per annum. The construction industry accounts for six per cent of India8217;s GDP and is the second-largest employer after agriculture.

	Real Estate Management Regulation 038; Control Bill:

			8226; Builders have to register with a regulatory authority. 8226; Penal provisions if builder does not deliver on time: fines, prison or blacklist. 8226; Construction company has to register with Deputy Commissioner in states or the Revenue Commissioner in Union Territories 8226; Building plans have to be approved by land revenue authority

The proposed bill will be put up on the Urban Affairs Ministry website next month for inviting comments from the public and the construction industry at large. Once passed by Parliament, this model bill will be passed on to the states for implementation as land is on the State List.

The proposed Act requires a construction company to register with the Deputy Commissioner in states or the Revenue Commissioner in Union Territories before it ventures into the real estate business.

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As a next step, the Bill requires the construction company to get approval of its building plans with the land revenue authority 8212; and not DDA or HUDA. This will be followed by an advertisement that will display the contract documents spelling out the deliverables time-frame of building and monthly installments from client, contractor and other stake holders.

One of the primary reasons for registration is to check the antecedents of the builder and cut down on the land mafia. At present, the construction industry is totally unregulated, with lack of proper disclosures on part of builders, who often dupe ill-informed consumers.

In fact, countries like the US, UK and European Union have such regulatory laws to protect the consumer. Here too, the thinking is to ensure that incidents like the infamous Skipper Group scandal do not occur, and chances of foreign investment in the sector increase.