Real Estate Bill
- Real Estate is a term which comprises not only of land and buildings on it but also of natural resources of land which is inclusive of its flora, fauna, crops and minerals.
- It comprises of three main categories:
- Up to 1980’s Real Estate was largely a concern of State institution but with liberalization, conscious encouragement was given to growth of private sector in construction.
- Presently Real Estate and housing sector is highly unregulated and opaque as it lacks transparency.
Real Estate Bill (REGULATION & DEVELOPMENT), 2013
- It aimed to protect interest of buyers and to promote fair play in Real Estate markets.
- Introduced mainly to reach objective of providing “Housing for All by 2022.”
- To boost domestic as well as foreign investment in real estate sector.
- Ensured formation of Real Estate Regulatory Authority (RERA) – for registration of Real Estate agents and their subsequent projects.
- Outlines duties of developers, buyers and agents in Residential Real Estate sector.
- Stipulates Uniform regulatory environment in real estate sector, genuine contract between buyers and promoters of Residential Real Estate projects.
- Developers barred from booking or offering projects of Residential Real Estate for sale without registering them in RERA.
- Uploading information of promoter with details of above mentioned point in website of RERA.
- 50% or less of the money paid by buyer should be maintained in a separate bank for construction of project.
- Written agreement with completion certificate and payments – a must.
- Real Estate Tribunal to be devised so that decisions of RERA could be appealed.
- Setting up of Central Advisory Council.
Real Estate Bill | Purpose
- To restore confidence of people in Real Estate zone by introducing transparency and accountability in housing markets.
- To help in accessing financial and capital markets in long term goals.
- Bill will promote orderly growth through consequent efficient project execution, professionalism and standardization.
- Along with guaranteeing speedy trials of disputes and growth to sector, it also ensured to curb corruption and use of black money in real estate market.
Real Estate Bill, 2013 | Drawbacks
- It does not enumerate any difference between Residential Real Estate and Commercial Real Estate.
- Some projects in Real Estate with certain investors or stakeholders do not come under category of this Bill, e.g. Government agencies/authorities at Centre, State and Municipal level; financing agencies like Bank/Financial Institutions, Brokers, Underwriters and Bulk Purchasers.
- It also does not provide any tool for transferring booking during construction time.
- It fails to provide any additional securities for retail purchasers
Real Estate Bill 2013 | Amendments
- Establishment of Real Estate Regulatory Authority: Formation of body called Real Estate Regulatory Authority in States as well as UTs to regulate Real Estate projects.
- Discrimination: There will be no discrimination based on caste, religion, creed, sex, or gender. Government may bring a non-discriminatory clause to allow anyone to buy a property in complex even a transgender.
- Applicability of Bill: Bill introduced in 2013 was applicable only to Residential Real Estate. Now, it is proposed to cover both Residential as well as Commercial Real Estate.
- Registration: Previously, developers had to register Residential projects if project was greater than 1000 sq. m. and had more than 10 apartments. But according to recommendation, projects on at least 500 sq. m. of area or with 8 flats also have to be registered to regulatory authority. It includes registration of Real Estate projects and agents along with disclosure of all registered projects as well as details of project, layout plan, etc.
- Refund of Money in Case of Misleading Advertisements: Incorrect information, false statement contained in notice, advertisement may lead to reimbursement of money to buyer.
- Compulsory Deposit of at least 70% of Total Cost of Estate: Amended Bill makes it compulsory for buyers to deposit 70% or more of total cost of estate which includes land and construction cost. Earlier, only 50% or less was required to be deposited. This 70% of money should be deposited in another bank account and should be only for said project.
- Builders are restricted from taking more than 10% Advance without a Written Agreement: Builder will not be able to take more than 10% advance money from buyers without a written agreement. Right now, a lot of dealings happen by paying huge advances and agreement part is delayed by many.
- Structural Defects: It is suggested that builders will be liable for structural defects with imprisonment of five years which is more than earlier prescribed punishment of two years. In such cases, jail term is that of one year or five per cent of apartment cost or both. Other pro-developer measures include single window clearance and digitisation of land records.
- Sale of Property as per Prices Linked with Carpet Area: Carpet area is the area which includes usable spaces like kitchen and toilets, and it should be clearly defined to impart clarity which earlier was not the case.
- Resident association: Formation of resident association has been made compulsory within 3 months of allotment of majority of units in project so that buyers get to utilize facilities such as common hall, club house, reading room.
- Payment of Interest: Builders have to pay interest if there is any delay or default in home at same rate as they charge home buyers.
- Consumer Courts: Aggrieved customers can now approach to any consumer court at district level also instead of regulatory body given in Real Estate Bill of 2013. This Bill also established a fast track dispute resolution mechanism which would solve disputes within sixty days through appellant tribunal against ninety days earlier proposed.
- Notification for Act: Now State has to make rules within six months of notification of proposed Act instead of one year, and allottees shall take possession of house within two months of issuance of occupancy certificate.
- Additional Benches of the appellate tribunal: For speedy adjudication of grievances, an additional bench of appellate tribunal can be made in a state.
- Punishment: For promoters, three years of punishment and for agents one year of punishment has been prescribed for violation of orders of appellate tribunal.
- Punitive Provisions: Punitive provisions including de-registration of project and penalties in case of contravention of provisions of Bill or orders of Authority or Tribunal.
- Bill looks to set up administrative bodies at Central and state level for responsible and transparent business practices.
Real Estate Bill | Benefits
- BUYERS: A sign of relief to home buyers who have suffered from huge losses, delays in delivery of their projects by developers, and discrepancy in fulfillment of promises made to them at time of booking.
- BUILDERS: They can impose a penalty on allottees for not paying dues on time. In case of any conflicts with buyers, builders also have opportunity to approach to regulator.