The Rajya Sabha passed the Real Estate Regulator Bill, which will help regulate the sector and bring in clarity for both buyers and developers, on Thursday, 10th March 2016.
Moving ‘The Real Estate (Regulation and Development) Bill, 2015’ for consideration and passage, Urban Development Minister M Venkaiah Naidu said it aims to protect the interests of buyers and bring more transparency in the sector.
Here are 10 things to know about the Bill’s reforms and regulations that will come to the Indian real estate sector:
- The bill will help establish state-level Real Estate Regulatory Authorities (RERAs) to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover. Projects measuring more than 500 sq. m. or more than eight apartments will be required to register with the RERA.
- The bill proposed that a minimum of 70% collections from buyers should be deposited in separate escrow account to cover the cost of construction and land. States can increase the ceiling but not lower it.
- Unaccounted money will be prohibited from being pumped into the sector, and as now, 70% of the money has to be deposited in bank accounts through cheques.
- Appellate Tribunals will now be required to adjudicate cases in 60 days, and Regulatory Authorities will be required to dispose of complaints in 60 days.
- The Bill also provides for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for any violation of orders of Appellate Tribunals or monetary penalties or both.
- Developers are required to post all information including but not limited to project plan, layout, government approvals, land title status, sub-contractors to the project, and schedule for completion with the State Real Estate Regulatory Authority (RERA).
- Carpet area has been clearly defined in the bill to include usable spaces like kitchen and toilets.
- The bill seeks to impose strict regulations on the developer and ensure that construction is completed on time. The builders will also benefit from the proposed legislation, as it proposes to impose penalty on allottee for not paying dues on time.
- A developer’s liability to repair structural defects has been increased to 5 years from the earlier 2 years.
- The developer cannot make changes to the plan that had been sold without the written consent of the buyer.