To protect the interests of buyers , Rajya Sabha clears Real Estate Bill
The Rajya Sabha approved the Real Estate (Regulation and Development)
Bill that promises muchdelayed clean-up of an industry that
routinely delays the delivery of homes for years, forces buyers to
accept shoddy construction, escalates costs without good reason and
leaves customers without any recourse to timely redress when
promises are broken.
The Bill will go to the Lok Sabha and then for presidential assent
before becoming law, a process that's expected to be smooth unlike
other reforms that have got stuck in the Upper House. The
legislation bars developers from advertising and selling homes in
projects until they have obtained all approvals from local
authorities.
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.
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.
It also mandates that builders deposit 70% of money collected from
buyers in an escrow account that will be utilized only for
construction and paying for land, putting an end to the
widespread diversion of funds to other projects. According to data
from property research firm Liases Foras, a third of more than 25
lakh apartments launched between 2008 and 2014 were delayed by at
least a year.
The delays have led to several home buyers agitating against
builders over the last few years. To bring more projects under the
ambit of the proposed regulators, the Bill says all projects on
land more than 500 sq metres or having eight apartments will have
to be registered with them.
The Bill says the developer will have to pay the same penal
interest rate for delays as the buyer does. Currently, this is
heavily skewed against the buyer.
The real estate sector, with over 76,000 companies, needs a
regulator urgently, Urban Development Minister Venkaiah Naidu said
in the Rajya Sabha, pointing to the telecom sector, which has a
watchdog agency with only a handful of operators.