Bill to regulate real estate business referred to Parliament panel
14 August 2013
The Rajya Sabha today referred a bill that seeks to ensure an orderly growth of the largely unregulated real estate sector through a uniform regulatory environment to a standing committee of Parliament.
Minister of housing and urban poverty alleviation Girija Vyas piloted The Real Estate (Regulation and Development) Bill, 2013 that provides for consumer protection and speedy adjudication of disputes in the Rajya Sabha today.
The bill, which has been approved by the union cabinet at its meeting on 4 June 2013, seeks to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector and has been much awaited by all aspiring home buyers.
The Real Estate (Regulation and Development) Bill, 2013 is a pioneering initiative to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects.
The bill has been prepared after extensive consultations with states, experts and stakeholders and has been supported by various state governments, the ministry of consumer affairs, the Competition Commission of India and the Tariff Commission, among others.
The bill contains elaborate provisions to bring in the much-needed transparency in real estate dealings through provisions for registration of real estate projects and real estate agents with the Real Estate Regulatory Authority.
The bill seeks to define the functions and duties of promoters and agents vis-a-vis the rights and duties of allottees.
The bill once enacted will lead to the establishment of a Real Estate Regulatory Authority and a Real Estate Appellate Tribunal in every state for registration of all real estate projects and for speedier dispute resolution.
The bill seeks stringent penalties on habitual offenders as a deterrent for erring builders who bring bad name to the developer community at large.
Currently, the real estate and housing sector is largely unregulated and opaque, and consumers are often unable to procure complete information, or enforce accountability against builders and developers in the absence of effective regulation. The bill is expected to ensure greater accountability towards consumers, and to significantly reduce frauds and delays.
The accountability in real estate and housing transactions would in turn enable the sector to access capital and financial markets, which is essential for its long-term growth.
The bill is also expected to promote regulated and orderly growth through efficiency, professionalism and standardisation. It seeks to ensure consumer protection, without adding another stage in the procedure for sanctions.
Benefits and advantages:
- Will bring about standardisation in the industry through clear definitions of 'apartment', 'common areas', 'carpet area', 'advertisement', 'real estate project', 'prospectus' etc and make it mandatory to use only the concept of 'carpet area' for sale of real estate property;
- Provides for specialised regulation and enforcement, which includes both curative and preventive measures, with powers to enforce specific performance not available under the consumer laws;
- The Real Estate Regulatory Authority will have powers to give directions for specific performance, impose penalty for non-registration of projects, including imprisonment for continuous violation of up to 3 yrs and impose penalty in case of other contraventions;
- Proposes to register real estate agents, which have hitherto been un-regulated, with clear responsibilities and functions, thereby leading to money trail and curbing money laundering;
- Aims at ensuring consumer protection, by making it mandatory for promoters to register all projects, prior to sale; and only after having received all approvals from development/municipal authorities thereby protecting buyer investments;
- Will promote transparency and fair and ethical business practices through disclosure of project details and contractual obligations vis-à-vis the project and the buyer, promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions;
- Establish a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal(s) in states, to enforce accountability norms for the promoter buyer and the real estate agents;
- Will infuse professionalism and promote planned development of the real estate sector through the promotional role of the regulatory authority;
- Will ensure timely completion of projects, and prevent fund diversion;
- Provides for a speedy and specialised adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector;
- The bill will catalyse domestic and foreign investment into the sector, thereby contributing to enhanced activity, and increase in GDP growth.
The bill applies to residential real estate, ie, housing and any other independent use ancillary to housing.
However, it will not apply where the area of land proposed to be developed does not exceed 1,000 square meters or the number of apartments proposed to be developed does not exceed 12, inclusive of all phases, or an area or number of apartments as notified by the central government on recommendations from the appropriate government.
This may be different for different states or union territories but the ceiling of not more than 1,000 square meters and 12 apartments stands.