Order out of chaos at last?
Realty regulator will provide much-needed relief to home buyers
Ravi Sharma booked a flat three years ago, but when it finally came up for possession, the apartment turned out to be much smaller than the promised 2200 sq ft. A colleague of his, who booked another flat in a big project around the same time, is yet to see construction begin at the site.
Homebuyers will be much relieved now that the Centre has finalised the draft Real Estate (Regulation & Development) Bill, pending since 2009. It will safeguard the rights of property buyers and is likely to be introduced in the winter session of Parliament after cabinet approval.
The Bill makes it mandatory for the developers to register themselves with the real estate regulatory authority to be set up in each state. Jail terms are recommended for developers making false promises. A penalty of 10% of the total project cost could also be slapped on them and licenses revoked in extreme cases.
Once the Bill is passed, developers will have to submit the approved layout plans, timelines, costs and the sale agreement to the regulator before launching projects. An escrow fund will be created where a percentage of the money collected from the buyers will be parked, to be used only for the specific project.
So, how is the new version of the bill different from the earlier drafts? The bill is no longer a model bill prepared by the central government for the state governments to follow. It is now applicable to the entire country and leaves it to the state governments to establish a real estate regulatory authority and other rules and procedures in due course. “The appellate tribunal provided for within the new version of the bill, is now at a central government level as opposed to the earlier state government level. This prima facie seems to be a wise move,” says Sachin Sandhir, managing director, RICS South Asia.
There is also a correlation between the Competition Commission of India, whereby the bill establishes that any disputes that fall within the purview of the commission will be passed on to them for review and, if possible, resolution.