Real Estate Bill Passed – Consumer is The King Now
Rajya Sabha yesterday approved the Real Estate (Regulation and Development) Bill, 2016 that seeks to protect the interests of the large number of aspiring house buyers while at the same time enhancing the credibility of construction industry by promoting transparency, accountability and efficiency in execution of projects.
The Bill seeks to put in place an effective regulatory mechanism for orderly growth of the sector which is the second largest employer after agriculture.
Importance of the Real Estate Bill:
As per the Union Minister of Housing and Urban Poverty Alleviation Venkaiah Naidu after the passing of Real Estate Bill the consumer has become the king just like consumer became the king in telecom sector post the introduction of a regulator.
Mr. Naidu also mentioned that there are a total of 76,044 companies are involved in real estate sector including 17,431 in Delhi, 17,010 in West Bengal, 11,160 in Maharashtra, 7,136 in Uttar Pradesh, 3,054 in Rajasthan, 3,004 in Tamil Nadu, 2,261 in Karnataka, 2,211 in Telangana, 2,121 in Haryana, 1,956 in Madhya Pradesh, 1,270 in Kerala, 1,202 in Punjab and 1,006 in Odisha.
Consumer friendly Real Estate Bill:
Since the introduction of the Bill in 2013, it had undergone many changes to make it more consumer friendly. Here are the strong provisions of the Bill:
- The Government has gone beyond the recommendation of the Select Committee and now requiring developers to deposit 70% of the collections form 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;
- Norms for registration of projects has been brought down to plot area of 500 sq.mts or 8 apartments as against 4,000 sq.mt proposed in the draft Bill in 2013 and 1,000 sq.mts or 12 apartments suggested by the Standing Committee;
- 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. About 17,000 projects are reported to be at various stages of development;
- Capret area has been clearly defined which forms the basis for purchase of houses, eliminating any scope for any malpractices in transactions
- 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;
- 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;
- The Bill provides for arranging Insurance of Land title, currently not available in the market which benefits both the consumers and developers if land titles are later found to be defective;
- Specific and reduced time frames have been prescribed for disposal of complaints by the Appellate Tribunals and Regulatory Authorities; and
- A provision is now made for imprisonment of up to 3 years for developers and up to one year in case of real estate agents and consumers for any violation of Tribunals and Regulatory Authorities.
Real Estate Bill requirements:
The Bill requires project promoters to register their projects with the Regulatory Authorities disclosing project information including details of promoter, project including schedule of implementation, lay out plan, land status, status of approvals, agreements along with details of real estate agents, contractors, architects, structural engineers etc. This enables transparent, accountable and timely execution of projects.
Real Estate Bill meets aspirations of owning a house:
The Real Estate Bill, 2016 enables the people meet their genuine aspirations of owning a house including those of urban poor by giving a fillip to affordable housing initiative under which the Government intends to enable construction of 2 crore by the year 2022 under Prime Minister's Awas Yojana (Urban).