The cabinet on Tuesday cleared the Real Estate (Regulation and Development) Bill 2013, which seeks to set up real estate regulators in states to protect the interests of homebuyers, ensure fair practices and accountability, besides fast-track dispute resolution.
The Bill proposes that developers register their projects with state regulatory authorities by declaring their building plans, timeline and other details of a project. This will then be posted on the regulator's website.
Developers have to declare this information in advertisements related to a project. A misleading advertisement by a developer, with representative pictures and not actual ones, is proposed to be a punishable offence.
India's real estate and housing sector is largely unregulated and opaque, and home buyers do not have access to complete information.
The builders lobby, however, said it was against the proposed law in its current form.
"We have been opposing the Bill in its current form from the beginning. We are disappointed with the way government is going ahead without addressing our concerns," said Anil Kumar Sharma, president, Confederation of Real Estate Developer's Association of India, National Capital Region (CREDAI-NCR).
"According to us, said Bill is neither benefiting the consumers nor other stakeholders. If this Bill would have covered other regulatory and approving authorities, then it would have been much beneficial for everybody."
The Bill, initially planned for the entire real estate sector, including commercial real estate, was amended after the urban development ministry objected to the inclusion of commercial real estate, and now covers only residential real estate.
The provision of depositing 70% of the money raised for a project in a separate account and using it for the development of that project has been diluted. This has been replaced by "70% or such lesser percentage, as notified by the appropriate government", under the Bill.
It also says builders can launch projects only after they acquire all clearances.
Brotin Banerjee, managing director and chief executive, Tata Housing Development Co. Ltd, said that while the move was a positive step, the government should also improve self-discipline in some ways, the most important of these being to give project approvals on time and avoid unnecessary delays.
An official from the housing and urban poverty alleviation ministry said the issue of faster clearances for projects is also being addressed by the ministry by working towards single-window clearance for the sector.
The official, who requested anonymity, also said that while the state governments will set up respective regulators, the case will be different only for Delhi.
"In the case of Delhi, the urban ministry will decide the regulatory authority," the official said.
Under the Bill, not sticking to deadlines will attract a penalty and repeat offences will invite a jail term. One or more real estate regulatory authorities will be set up in each state and union territory with specified functions, powers and responsibilities, as per the Bill.
Once the Bill comes into force, there will be a standard definition of carpet area for the entire country, the official added.
Under the proposed Bill, all property brokers must obtain a licence to conduct business.
The official added that the Bill would benefit those who have already bought a house.
"If there is delay and cost escalation for ongoing projects, then the consumers can approach the adjudicating authority (or regulator) to settle the dispute," the official said.
The Bill will provide much-needed transparency in the sector and provide relief to home buyers, experts said.
The Bill proposes that the buyer should have the right to refunds with interest, in the case of delays.
These provisions ensure that buyers cannot be taken for granted by the developers, said Pankaj Kapoor, managing director at real estate research firm Liases Foras, adding that greater transparency will help the market mature and developers will benefit in the long run.
Regards
Prarthana Jalan
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