Real Estate - Regulation and Development Bill - Features

Real Estate - Regulation and Development Bill – Features

Question - The real estate sector must be regulated to ensure progressive growth and development. Discuss the Real Estate (Regulation and Development Bill) recently passed by the Union Cabinet.

Union Cabinet recently approved the Real Estate (Regulation and Development Bill) which approves the formulation of a regulator for the real estate sector

Features of the Real Estate (Regulation and Development) Bill

• The bill also seeks to protect the interests of the consumers

• It seeks to establish regulatory bodies at the Central and states level for accountable and transparent business practices within the real estate sector

• Bill also provides for necessary registration of projects and real estate agents who intend to sell plots, apartments or buildings with the Real Estate Regulatory Authority

• It will also make disclosure of information such as details of promoters and land status mandatory prior to sale of real estate

• The bill also seeks an enforcement of a contract between developers and buyers

• It also seeks to establish a fast track mechanism for dispute settlement

• The bill also expected to improve accountability towards customers and reduce chances of protracted delays or frauds

• Proposed bill also works to enhance the efficiency and professionalism of the real estate sector through regulated and orderly growth of the real estate sector

• Enhanced private participation for Housing for All by 2022 was also emphasised by the Bill

• This bill is applicable for residential real estate and it will cover residential as well as commercial real estates

• The bill also appoints adjudicating officers of real estate regulatory authorities to settle disputes and charge compensation and interest

• Functions and duties of promoters have also been stressed in the bill; this includes disclosure of relevant information of the project, adherence to plans and project specifications, obligations regarding factuality of advertisement for sale or prospectus

• The bill also makes provisions for deposit of 50% or lower as notified by the concerned state government, of the amounts realised for the real estate project from allottees in separate accounts within a scheduled bank in a period of 15 days for covering construction cost to be used for this function

• Adherence to declared plans is another important stipulation by this bill which bars promoters from altering plans; minor alterations are however permissible on account of structural and architectural reasons

• Functions of real estate agents have also been defined by the bill alongside rights and duties of allottees

• Real estate agents selling properties must be registered with the authority and maintain books of accounts, documents and records apart from not engaging in unfair trade practices

• Rights and duties of allottees include right to get stage wise time schedule of the project, claim possession as per declaration by the promoter, refund interest and compensation for default by the promoter, while allottees will make payments and meet responsibilities as per the agreement

• The bill has also specified the functions of the real estate regulatory authority which must act a nodal agency for ensuring growth and promotion of transparency and accountability in the real estate sector

• The bill has also prescribed a fast track dispute settlement mechanism with a district judge to hear appeals

• The bill also lays down conditions for establishment of the Central Advisory Council and the Real Estate Appellate Tribunal apart from punitive provisions and bar of jurisdiction courts

Facts and Stats

• The Real Estate Regulation Bill was introduced by the UPA government in the RS in August 2013

• This bill was referred to the Parliamentary Standing Committee that submitted its report in the month of February 2014

• The Standing Committee had made several recommendations including that the bill should regulate commercial real estate, smaller projects should also fall under the ambit of the act and all real estate agents must be registered

• Important changes were made to the bill by the Modi government, namely the following:

• Earlier bill had mandated that developers should put 70% of the buyer’s investment into escrow account to be used for constructing the project but this has come down to 50% as per the NDA government

• Also, the other aim was to bring the commercial segment of the real estate sector under the control of the bill; this was earlier limited only to regulation of residential real estate

Bill now includes a condition to prevent developer from changing plans in the project unless 2/3rd of the allottees have agreed for the change.