Real Estate Bill 2015: The Union Cabinet approved the Real Estate (Regulation and Development) Bill, 2015 which will now be taken up for consideration by the Parliament.
Real Estate Bill 2015 is an initiative to protect the interest of consumers, promote fair play in real estate transactions and to ensure timely execution of projects.
The Bill ensures mandatory disclosure by promoters to the customers through registration of real estate projects as well as real estate agents with the Real Estate Regulatory Authority.
Real Estate Bill 2015 aims at restoring confidence of consumers in the real estate sector, by institutionalizing transparency and accountability in real estate and housing transactions which will further enable the sector to access capital and financial markets.
Real Estate Bill 2015: Main Features
The salient features of the Real Estate Bill 2015 include establishment of ‘Real Estate Regulatory Authority’ in states/union territories to regulate real estate transactions. It is applicable both for commercial and residential real estate projects.
Projects of 500 sq.mt area or 8 flats will have to be registered with regulatory authority instead of 1,000 sq.mt and 12 flats earlier.
Registration of real estate projects and real estate agents with the authority, mandatory disclosure of all registered projects, including details of the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer are other features of the Bill.
Real Estate Bill 2015 has also specified that deposit of specified amount in a separate bank account to cover the construction cost of the project for timely completion of the project. The Bill includes a provision requiring real estate developers to deposit 70 per cent of the project cost in a separate escrow account.
Real Estate Bill 2015 envisages establishment of a fast-track dispute resolution mechanism for settlement of disputes through adjudicating officers and Appellate Tribunal.
Other major changes approved by the Cabinet in the Real Estate (Regulation and Development) Bill, 2015 include equal rate of interest to be paid by promoters and buyers in case of default or delays while liability of promoters for structural defects has been increased from the earlier 2 to 5 years.
Carpet area has been clearly defined to include usable spaces like kitchen and toilets imparting clarity in the matter which was not the case earlier.
Garage is now to kept out of the purview of definition of apartment and is separately defined and formation of allottees associations is now mandatory within three months of allotment of majority of units in a project so that buyers get to manage facilities like common hall, club house, reading room.
Aggrieved buyers can now approach 644 consumer courts which are available at district level in the country instead of only the Regulatory Authorities proposed to be set up under the Bill, mostly in capital cities, for redressal of grievances. This makes it easy for buyers besides reducing the costs of seeking redressal.
Regulatory authorities would promote single window system of clearances for real estate projects benefiting the sector and can now grade projects along with grading of promoters, besides ensuring much desired digitization of land records.
Regulatory authorities will now be required to make regulations within three months of its formation as against six months earlier proposed.
States will now have to make rules within six months of notification of the proposed Act as against one year earlier proposed and allottees shall take possession of houses in two months of issuance of occupancy certificate. This prevents delaying registration resulting in denial of revenues to the respective states in the form of stamp duties and registration charges.
Chairmen and Members of regulatory authorities and appellate tribunals are barred from taking up post-retirement jobs except in government and statutory bodies.
Additional benches of appellate tribunals can be set up in a state if required for speedy adjudication of grievances.
There is new provision for imprisonment up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of appellate tribunals. Appellate Tribunals now required to adjudicate cases in 60 days as against 90 days earlier proposed and regulatory authorities to dispose of complaints in 60 days while no such time limit was indicated earlier.
With all these major amendments to the Real Estate Bill first moved in 2013, the Real Estate (Regulation and Development) Bill, 2015 is expected to protect the interests of large number of buyers besides promoting fair play in real estate transactions and ensuring timely execution of projects.
According to a real estate research agency, 10 lakh consumers buy houses every year with an investment of about 3.50 lakh crore in residential segment. About 3,200 to 4,000 new projects are launched every year.
At present about 17,000 real estate projects are in progress in 26 major urban agglomerations in the country which also will come under the ambit of the proposed Bill.