REALTY REGULATION BILL: HOW THE CONSUMERS STAND TO GAIN
August 12, 2015
The Union Cabinet last week approved the Real Estate (Regulation and Development) Bill 2013 that allows for the creation of a bona-fide and empowered Regulator in the real estate sector. Once enacted, it is aimed to protect buyers’ interests and usher in the much-needed transparency in the sector, which was until recently unregulated and relatively unaccountable. The upcoming regulation of real estate will hopefully provide considerable relief to the ordinary buyers and investors who have had to go through innumerable obstacles due to the grey areas prevalent in the purchase of property.
This Bill looks to ensure that construction is not only completed in a timely manner but that on completion the buyer gets the property as per the stated specifications that he has been promised. The developer is required to declare the time frame for developing the project and has to adhere to such timelines, failing which there would be considerable penalties imposed by the Regulator.
The Bill also makes it mandatory to define the carpet area which shall be a standard definition across the country. For compliance, the Bill will provide model Agreement to Sell under which the promoter is liable to furnish the necessary project details to the allottee/buyer while also becoming responsible for providing project level details as demanded by the buyers.
There are also provisions to deter builders from issuing misleading advertisements on upcoming projects. A first-time breach would attract a penalty, which could be up to 10% of the project cost. A repeat offence could also land the developer in jail for up to 3 years! The aim is to make it mandatory for a developer to set aside half the money collected from buyers into a separate bank account for every project to ensure that the money raised for a particular project is not diverted into another project at the cost of the former. By establishing the Regulatory Authority and the requisite Appellate Tribunal, there would be provision for dispute resolution with a Specialized Forum for sorting disputes related to property matters. Consumers and investors who until now had no recourse except a prolonged litigation process in a court of law or consumer courts will be able to file their grievances with the Specialized Forum for quick and satisfactory resolution.
Developers will need to also clearly mention the governmental sanctions and approvals that they have obtained, and cannot market or promote the project unless the necessary approvals are in place. By making registration of the project compulsory with the Regulatory Authority, the Bill will certainly provide greater transparency in project marketing and most importantly, execution. The Bill itself has been thoroughly thought through and hence, works both ways. While it aims to hold the developers accountable, it also looks to ensure that the allottees/buyers do not default in making payments. Thus, by providing penalties for both the promoters and the allottees/buyers, the Bill seeks to ensure that non-compliance is minimal in the entire process. It has also been attempted that the category of real estate brokers too are brought under the ambit of this Bill by making their registration mandatory, thereby providing further safeguards against tall claims and general deception.
While single-window clearance for projects is not going to be easy on account of the simultaneous coordination that would be required with related government bodies like, the Ministry of Environment, Airports Authority of India, the Ministry of Housing and Urban Poverty Alleviation, et al., the details and concerns in this regard are being worked out since single-window clearance will be important if Indian real estate is to function as an industry.
It is also of paramount importance to introduce this legislation at the earliest. Practical glitches will emerge given the magnitude of the Bill, but these would have to be ironed out in due course with some political and executive will if the intent to safeguard home buyers is to be translated into ground reality.
We at Alpha G:Corp feel delighted and gratified at the Real Estate Regulation Bill being approved at this juncture. From the time of Alpha G:Corp’s inception in 2003, we have announced and initiated projects only after procuring all required regulatory licenses from the Government for all projects without exception. Being a 100% FDI compliant company with Morgan Stanley Real Estate as one of the investors, projects undertaken by us have separate earmarked Escrow bank accounts and funds received from buyers get deposited directly in the respective project’s dedicated account. Finally, in the present context, the consumer deserves the transparency and services being promised through this Bill. It is this belief that the consumers’ interests should be paramount that has led us to achieving our primary objectives and targets as a progressive developer, and I hope the new Regulation will increase that perception of the customers’ rightful importance across the Indian real estate industry.