The NDA government had mentioned a few provisions and amendments in the Real Estate (Regulation and Development) Bill back in 2013. On Dec 9, 2015 the bill was received with cabinet’s due approval in the parliament. It is anchored at improving the scenario of domestic and foreign investment in the Indian realty sector, promoting fair play in the market, protecting the interests of buyers and bringing transparency in the sector.
Construction delays and piling up of bank interests led to a punctured confidence of buyers and investors. For a long time, the sector has felt the need for a proper regulatory authority. Now the wait is finally over. Let us take a closer look at major amendments made to the bill and how it affects the homebuyers and other market players.
1- The Real Estate bills calls for a regulatory authority to be established at state (or Union Territories) levels to regulate the real estate transactions in the area. This will instill greater transparency in the sector and investments will become more structured. Once this happens, the foreign investment in the sector would also rise.
2- Under the new provisions, all the real estate projects and also the agents will have to be registered with the regulatory authority of the respective state. Developers will have to disclose the details of their project including the approvals from other government authorities, status of the land on which the project will be developed, layout plans, etc.
3- The developers will have to deposit 70 percent of their project cost in an escrow account. This is to make sure that they do not consolidate and utilize their funds from different projects; funds from one project should be utilized to develop the same and none else. It will also ensure timely construction of the project.
4- Developers and promoters will have to disclose important information about their projects to the buyers. Any change in the project design and layout will not be allowed without the consent of the buyers.
5- As per the amendments, properties with sizes greater than 500 sq mt (or 8 flats) will fall under the scope of the law, as opposed to 1000 sq mt (or 12 flats) which was the criteria earlier.
6- The local authorities that provide certain approvals to the developers will also be under the ambit of the law. This is to protect the developer’s’ interests. Many a times they fail to meet the deadlines due to a delay in receiving necessary approval from the authorities. But now they have a legal recourse for the same.
7- Homebuyers have the right to approach consumer courts in case of any disputes or discrepancies. 644 district level consumer courts will be set up.
8- The bill also mentions penalties and punishments for the violation of the provisions of the bill. If the builders violate it, they may be imprisoned for three years. If the buyers or agents do, they will be imprisoned for one year.
9- A fast track dispute resolution mechanism will be established for quick resolution of disputes among different parties via Appellate Tribunal and adjucating officers.
10- All the above provisions will be applicable for residential as well as commercial real estate.
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