Cabinet nod for real estate bill amendments
08 April 2015
The union cabinet on Tuesday approved amendments to the Real Estate (Regulation and Development) Bill, 2013 that could help prevent real estate developers from cheating home-buyers.
The government said that the recommendations of the standing committee of parliament on urban development, and suggestions of various stakeholders including consumer organisations, industry associations, academia, experts, etc, have also been included in the amendments after extensive consultations.
The Bill contains provisions for registration of real estate projects and real estate agents with a Real Estate Regulatory Authority that should be established; functions and duties of promoters and allottees; fast track dispute resolution through adjudication; and establishment of a Real Estate Appellate Tribunal.
The cabinet has extended the applicability of the Bill to commercial real estate also. Ongoing projects that have not received Completion Certificates have also been brought under the purview of the Bill and such projects will need to be registered with the regulator within three months.
Another major modification is that promoters will not be allowed to change plans and structural design without the consent of two-thirds of buyers in a project. Real estate agents also would be punishable for non-compliance of the orders of Regulatory Authority and Appellate Tribunals to be set under the proposed law.
Under other stipulations approved by the cabinet, states have to frame rules within one year.
Real estate project developers both in residential and commercial sectors will be required to register their projects with the Regulatory Authorities to be set up.
Promoters will be mandatorily required to disclose all information regarding the promoters, project, layout plan, schedule of development works, land status, status of statutory approvals, pro-forma agreements, names and addresses of real estate agents, contractors, architect, structural engineer, etc.
Promoters will also be required to compulsorily deposit 50 per cent of the amount collected from consumers in a separate account in a scheduled bank within a period of 15 days to cover the cost of construction. This provision of 50 per cent has been made after taking into account the cost of land needed to be acquired before announcing a project.
Penal provisions under the proposed law include payment of 10 per cent of project cost for non-registration and payment of another 10 per cent of project cost or three year imprisonment or both if continuing non-compliance. For wrong disclosure of information or for not complying with the disclosures and requirements, payment of 5 per cent of project cost will be imposed.
Regulatory authorities will also have the power of cancellation of registration in case of persistent violations and decide on the further course of action regarding completion of such projects.
Under the proposed law, one or more regulatory authorities will be set up in each state / union territory or one authority for two or more states / union territories by the concerned governments for oversight of real estate transactions.
These regulators will co-ordinate efforts regarding development of the real estate sector and necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector.