The Union Cabinet Wednesday approved the Real Estate (Regulation and Development ) Bill, 2015 , paving the path for a regulator for the real estate sector along the lines of those for telecom , electricity , securities , banking and insurance sectors .
The legislation provides for compulsory disclosure of all real estate project details by developers , mandates registration of projects as well as real estate agents with the state level Real Estate Regulatory Authority and a second tier for adjudication of disputes , namely the state Appellate Tribunal.
The Cabinet has approved the amended draft of the Bill to regulate all transactions between home buyers and builders based on recommendations by a Select Committee of the Rajya Sabha . The Legislation now Covers under its ambit all residential and commercial projects over 500 sq m
area or with a minimum of eight apartments as against the earlier project size of 1,000 sq m land area or 12 apartments or more.
Another important provision is the requirement for developers to keep 70
per cent of the project cost , Which includes the land cost , in a dedicated account . The Government had earlier this year proposed to dilute it to 50 per cent or less , which the select panel said should be changed to 50 per cent or more.
The new version of the Bill also has several clauses that balances the currently skewed builder-buyer power equations. For instance, as against the practice of builder-drawn sale agreements being heavily tilted in favour of developers, the legislation provides for a Model Agreement, which shall be the basis of all transactions. Moreover, defaulting developers who until now got away by paying paltry interest rates will now be required to pay the same interest rate shelled out by buyers who delay payments.
One of the most significant changes approved in the Bill is enhanced punishment for builders who fail to abide by the orders of the quasi judicial appellate tribunal. Such developers will be faced with a three-year imprisonment or a fine equal to 10 per cent of project cost or both.
Following representations from developers’ bodies, the new version of the Bill has also provided for imprisonment of real estate agents as well as buyers who don’t follow the orders of the appellate tribunal. In such cases, the jail term is that of one year or five per cent of the apartment cost or both. Other pro-developer measures include single window clearance and digitization of land records.
The Bill was first introduced in the Rajya Sabha in August 2013. The NDA government moved certain amendments in April this year. Following allegations of the Bill being diluted, it was referred to a 21-member select committee. The reworked Bill will now be introduced in the Rajya Sabha during the ongoing winter session.
A Ministry of Urban Development official said industry figures show that the residential realty market alone sees an annual investment of Rs 3.50 lakh crore and about 10 lakh new home buyers every year. “There are 17,000 real estate projects that are in progress in 26 major urban agglomerations in the country. These will all come under the ambit of the proposed Bill.”
The revised Bill also bars chairmen and members of the regulatory authorities and appellate tribunals from taking up any post retirement jobs in the private sector.