Thursday 10 March 2016

What Real Estate Bill has for Buyers & Developers

New DelhiThe Real Estate (Regulation and Development) Bill, 2016, passed in the Rajya Sabha on Thursday seeks to protect the interests of home buyers while at the same time promote transparency, accountability and efficiency in execution of projects. 

Minister of Housing and Urban Poverty Alleviation M Venkaiah Naidu said that over the years the sector has acquired a degree of notoriety which needs to be addressed to enable enhanced flow of investments.

The Congress extended its support to the Bill, which was passed by a voice vote in the House. It is touted as a major reform measure to regulate the vast real estate sector and bring order in it.

Here are the salient features of the Bill:

1. The Bill ensures the timely completion and delivery of flats to the consumer by ensuring that strict regulations will be imposed on developers to ensure timely construction and delivery. It further provides that consumers are entitled to a full refund with interest, if there has been a long delay in the delivery of a flat.

2. The Bill has put in place a robust mechanism for the publication of accurate project details and disclosures. The Bill mandates that developers need to share final project plans as part of their disclosure terms, with no room for iterations. The Bill also imposes a 10% project cost penalty and upto 3 years in jail. These add a much needed degree of accountability and also protects consumers from this highly prevalent malpractice.

3. The developers need to deposit 70% of the collections from buyers in a separate accounts towards the cost of construction including that of land as against a minimum of 50% suggested by the Select Committee.

4. Norms for registration of projects has been brought down to plot area of 500 sq.mts or 8 apartments as against 4,000 sq.mts proposed in the draft Bill in 2013 and 1,000 sq.mts or 12 apartments suggested by the Standing Committee.

5. Bill ensures that all clearances are completed before the launch of a project. Sections of the Bill mandate that developers have to receive all clearances before issuing their properties for sale. Most builders offer flats at huge discounts at the pre-launch stage to attract buyers - but without informing consumers about the status of clearances and potential delays in delivery.

6. Bill mandates that developers are bound to provide after sales service for properties found to have structural defects, at no extra cost to the consumer. Under the Bill, buyers are simply required to inform the developers of the deficiency within one year of purchase.

7. Liability of developers for structural defects have been increased from 2 to 5 years and they can't change plans without the consent of two thirds of allottees.

8. Commercial real estate also brought under the ambit of the Bill and projects under construction are also required to be registered with the Regulatory Authority.

9. Capret area has been clearly defined which forms the basis for purchase of houses, eliminating any scope for any malpractices in transactions.

10. Ending the earlier asymmetry which was in favour of developers, both consumers and developers will now have to pay same interest rate for any delays on their part.


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