CHENNAI: After months of wobbling, the gridlock is broken with the Rajya Sabha finally passing the long-awaited Real Estate (Regulation and Development) Bill, 2015, on Thursday.
This comes as a huge relief for home buyers, who currently have no dedicated platform to register grievances other than approaching consumer courts. The Bill, which will be placed before the Lok Sabha and then become a law, will reinforce trust into realty sector.
By having its own watchdog, the authorities will regulate transactions, bring in transparency, protect consumer interest, improve developer accountability and boost investments. Passed as a voice vote, it is touted as a major reform that the government has been trying to pass for sometime to make property buying orderly. It puts a check on unscrupulous activities of developers, provides for registration of all real estate projects, prohibits routing of unaccounted money as 70 per cent of the payment should be via cheques. Also, a minimum of 70 per cent payment from buyers will be put in an escrow account, thereby improving accountability and transparency.
The legislation provides monetary penalty or/and imprisonment of up to three years for real estate agents, buyers and promoters in case of violations. State-level Real Estate Regulatory Authorities (RERAs) will be set up to regulate both residential and commercial property transactions to ensure timely completion. Appellate Tribunals will adjudicate cases in 60 days as against 90 days, while RERAs will dispose of complaints in 60 days.
According to Union Minister for Urban Development, Venkaiah Naidu, the objective of ‘housing for all’ can only be achieved if construction sector is supported to grow orderly in an atmosphere of mutual trust and confidence, credibility, efficiency, accountability and transparency and timely execution of projects.
Real estate sector is the second largest employer in the country, next only to agriculture and accounts for over 9 per cent of GDP.
Around 10 lakh people buy houses every year involving an investment of about `3.5 lakh crore. As per estimates, among 27 cities including 15 capitals, 2,349 to 4,488 new housing projects were launched every year between 2011 and 2015. “In these cities during the last five years, 17,526 projects were launched with a total investment value of `13,69,820 crore,” said Naidu.
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Carpet area will be defined and buyers can pay only for carpet area and not super built-up area. Also, consent of at least two-third of buyers is required for any change in building plan
Developers will have to deposit at least 70% of payments from buyers in a separate escrow account
An equal rate of interest has to be paid by promoters and buyers in case of defualt or delays. Currently, developers pay only 2-3% interest in case of default, while buyers pay 16-18% interest for a default
Punishment for violations include monetary penalty or imprisonment of up to 3 years in case of promoters and up to one year in case of realty agents and buyers
Registration of projects with eight flats or at least 500 sq mt is mandatory with the regulatory authority instead of 1,000 sq mt and 12 flats earlier
Disputes and complaints will have to be disposed of in 60 days by both Appellate Tribunals and regulatory authorities