How se­ri­ous is the govt about the reg­u­la­tory bill?

Law­mak­ers have to re­alise the need to bring in trans­parency in the realty sec­tor and make builders, agents ac­count­able

HT Estates - - NEWS - Van­dana Ram­nani

From jail term up to three years for builders and the prom­ise of bring­ing all real es­tate bro­kers under its am­bit – the real es­tate (reg­u­la­tion and de­vel­op­ment) bill has it all but one has to see how se­ri­ous the law­mak­ers are about pur­su­ing it in the win­ter ses­sion of Par­lia­ment be­gin­ning on Novem­ber 24.

The bill, in­tro­duced in the Ra­jya Sabha by the UPA gov­ern­ment last Au­gust, cov­ered only res­i­den­tial real es­tate and real es­tate de­vel­op­ers. The lat­est pro­pos­als have sought to bring com­mer­cial real es­tate and bro­kers under its am­bit.

It is pro­posed in the bill that real es­tate reg­u­la­tors be set up in ev­ery state to pro­tect the in­ter­ests of home­buy­ers, en­sure ac­count­abil­ity and fast­track res­o­lu­tion of dis­putes. All builders de­vel­op­ing projects us­ing land in ex­cess of 1000 sq m will have to reg­is­ter with the pro­posed real es­tate reg­u­la­tory author­ity or RERA be­fore launch­ing or even advertising their projects. They will, ac­cord­ing to the bill, de­clare build­ing plans, area of the flat, time­lines etc be­fore launch­ing the pro­ject. Any mis­lead­ing ad­ver­tise­ment by a developer with rep­re­sen­ta­tive pic­tures and not ac­tual ones, will be a pun­ish­able of­fence.

Also, by mak­ing reg­is­tra­tion of the pro­ject com­pul­sory with the reg­u­la­tory author­ity, the bill aims to pro­vide greater trans­parency in pro­ject marketing and ex­e­cu­tion. Fail­ure to do so for the first time would at­tract a penalty which may be up to 10% of the pro­ject cost and a re­peat of­fence could land the developer in jail.

With in­ci­dents galore of prop­erty buy­ers get­ting duped by agents and bro­kers, a pro­posal to make RERA reg­is­tra­tion manda­tory for real es­tate agents has also been mooted. They will now have to get reg­is­tered with the pro­posed real es­tate reg­u­la­tory author­ity and get a li­cence (re­newed pe­ri­od­i­cally) be­fore they set up shop. If the bro­ker were to com­mit a fraud, the li­cense can be can­celled – as is done in Dubai and Sin­ga­pore. It also means the end of the fly-bynight prop­erty agents.

S K Pal, a Supreme Court ad­vo­cate, says that since bro­kers play the most im­por­tant role in the sup­ply chain – they are the first point of contact be­fore the buyer fi­nalises a prop­erty deal – they ought to be made ac­count­able.

In most cases, when prob­lems arise with a pro­ject, the bro­ker sim­ply washes his hands off the en­tire deal. That’s pri­mar­ily be­cause he has re­ceived his com­mis­sion and the mat­ter is closed.

If bro­kers are reg­u­larised and their li­censes re­newed from time to time, they will be brought under the tax net and will also have to pay li­cense fee to the gov­ern­ment, which means rev­enue for the lat­ter, Pal added.

The bill also seeks to im­pose strict reg­u­la­tions on the pro­moter and en­sure that con­struc­tion is com­pleted on time. Its pur­pose is to en­sure that the buyer gets the prop­erty as per the spec­i­fi­ca­tions that he had been promised

In its new pro­posal, the hous­ing min­istry also in­tends to ex­pand the purview of RERA to cover com­mer­cial as well as res­i­den­tial real es­tate.

The bill man­dates a com­pul­sory de­posit by the developer of 70% of the pro­ject cost in a des­ig­nated sep­a­rate es­crow ac­count. This is to make sure that the money raised for one pro­ject is not di­verted and utilised far a spe­cific pro­ject. There’s also a pro­vi­sion of re­turn of money to the cus­tomer with in­ter­est in case of de­lay. The bill also states that the developer will not have to sell an apart­ment on the ba­sis of the car­pet area and not the su­per area. It also seeks a def­i­ni­tion of the car­pet area and stan­dard­ise it across the coun­try.

By seek­ing to es­tab­lish a reg­u­la­tory author­ity and the ap­pel­late tri­bunal, the bill aims to cre­ate a dis­pute res­o­lu­tion mech­a­nism and pro­vide a spe­cialised fo­rum for hear­ing dis­putes re­lated to prop­erty mat­ters. The orig­i­nal bill was re­ferred to the par­lia­men­tary stand­ing com­mit­tee, which made sev­eral rec­om­men­da­tions in its re­port sub­mit­ted to the hous­ing and ur­ban poverty al­le­vi­a­tion min­istry in Fe­bru­ary 2014.

While most de­vel­op­ers had wel­comed the pas­sage of the Bill by the cab­i­net last year as a “wa­ter­shed de­vel­op­ment”, many had also claimed that pro­vi­sions such as launch­ing projects after get­ting statu­tory clear­ances can de­lay projects and that the gov­ern­ment should en­sure that the au­thor­i­ties send their ap­provals on time.

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