The Real Estate (Regulation And Development) Bill has been in the news in the past few months and created a hype among buyers and developers. On 30th July 2015, a Rajya Sabha Committee’s crucial report on the Bill was submitted in the Parliament. A parliamentary committee recommended several measures favoring the property buyers.
What is it?
The Bill aims to set up a regulatory framework that will govern contracts between property buyers and sellers. So far, property buyers were forced to follow the rules got from builders which include one-sided contract terms, cost escalations, arbitrary changes to the plan and abounding more. But, Real Estate Regulation Bill proposes to stop such practices by establishing the Real Estate Regulatory Authority (RERA) for regulation and promotion of the sector. This will keep records of projects, promoters and a database of violators.
What are the key measures of the Rajya Sabha committee’s report?
1. Instead of covering projects of area of 1,000 sq m or 12 flats, the new law says that project should cover area of 500 sq m or eight flats.
2. The 50% of payments made by property buyers for a particular project should be kept in separate account and used for the same project. On the other hand, builders have permission to spend the remaining money on other projects.
3. Builders who defaults on promises made to a buyer must either serve a three year jail sentence or a fine of up to 10% of project cost or both.
4. Under a new law which will cover projects of 500 sq m or eight flats, builders who default on project must either serve a 3 year jail term or pay a fine.
5. New law says that, promoters should audit their accounts after 6 months after the close of every financial year by a practicing chartered accountant
6. A person who is the owner of more than two flats or plots in the same project should be treated as a promoter.
7. Before applying for registration of any residential property in India, it is mandatory for promoter to enclose complete information of its existing projects, approvals, payment credits and land titles with the authority.
8. In order to change the project specifications post-sale, the permission of at least two-thirds buyers would be required.
9. Carpet area should cover the net usable floor area of an apartment. The external walls, area under service shafts, Verandah or exclusive balcony and open terrace areas are not included in the carpet area.
Why is it Important?
In the last few years, India faces a severe housing shortage and on the other side, buyers are put off by high property prices and the unethical practices of many developers. A law which brings transparency in the sector can not only bring in more investments but it also has the prospective to moderate prices and makes housing affordable. This will be necessary for the success of the ‘Housing for all by 2022’ vision of the government.