Upcoming Real Estate Bill to Help Ensure Transparency in Real Estate
Here’s some good news for real estate developers and builders. The Union Cabinet has deferred its decision concerning the Real Estate (Regulation and Development) Bill this session. The Bill proposed to set up a regulator for the real estate sector with the provisions for jail term for developers for putting out misleading (or misunderstood and misinterpreted as they could be) advertisements about projects.
With this, as the main highlight of the bill, many real estate developers and members of CREDAI, the realtors’ apex body, came out with open criticism claiming that the bill in its current form was not practical and balanced; it favored the property buyers alone.
The clock’s been ticking fast since 2009, when the bill was first introduced, but not fast enough for its approval by the Cabinet even after a lapse of 4 years. It will be interesting to keep tab whether the bill is fated to become a reality before the 2014 General Elections or not, and what impact will it have, if implemented?
If the Real Estate Bill becomes a reality, this is what lies ahead for the Real Estate Developers. A few harsh impositions and a few reasonable ones :
- The legislation will clearly define the term ‘Carpet Area.’ No private developer will be allowed to sell houses and flats based on ‘Super Area.’
- Regulators in every state will ensure that private developers get projects registered and also get all the necessary clearances prior to selling any property.
- No private developer will be allowed to advertise a housing project without receiving all necessary clearances.
- Developers will not be allowed to collect any money from the buyers before getting the required permits and approval for construction.
- Builders will not be allowed to use pictures of the housing project to lure foreign buyers. They will have to use pictures of the actual project only.
- It will be mandatory for all developers to maintain separate accounts for a particular project. Also, diverting money from one project to another will be strictly prohibited.
- Developers will have to submit all the necessary clearances to the regulator, which will also be displayed on the regulator’s website.
- Any developer failing to comply with the above for the first time will be awarded a penalty of 10% of the project cost. And in case of repeat offence, the developer will land in the jail.
- In an attempt to reduce buyer ambiguities, the bill shall have provisions for a builder-buyer model of agreement that will make the housing terms easier to understand.
According to the government plans, the bill aims to establish a regulatory authority for enforcing fair practice and introduce greater accountability norms, and implement a fast track dispute resolution mechanism.
Unequivocally, the bill is buyer-centric, and there is hardly any benefit for the realtors. Since its inception, the bill has been facing stiff opposition from the Real Estate developers and builders for being one-sided. They’ve been successful so far in holding the approval of the bill, but, the question remains for how long?