Achhe din for home buyers! Rajya Sabha passes Real Estate Bill
In a big relief to all the home buyers around the country, Rajya Sabha finally gave its nod for the Real Estate Bill on Thursday evening. The bill seeks to regulate the sector by protecting consumer interests and bring transparency.
After the upper house nod, the Bill will go to the Lok Sabha and then for Presidential assent, before becoming a law, a process that's expected to be smooth, unlike other reforms that have got stuck in the Rajya Sabha.
The Real Estate (Regulation and Development) Bill, 2013' has long been in limbo due to constant changes being made to the original drafted legislation. The Bill, passed with all the new recommendations that were cleared by the Union cabinet in December, will regulate both commercial and residential projects and set up state-level regulatory authorities to monitor real estate activity.
Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days and Regulatory Authorities are to dispose of complaints in 60 days, while no time frame was indicated in the earlier Bill according to the Urban development ministry.
The salient features of the Bill are:
· Mandatory registration to be done with the respective real estate regulatory authorities of projects of at least 500 sq. m area, or those comprising eight flats, which would enable registration of more projects with the regulatory authority and will protect property buyers.
· Bill requires Project developers to deposit at least 70 per cent of their funds, including land cost, in a separate escrow account to meet the cost of construction. Usually practice of builders has been to divert the funds earmarked for a particular project to other projects.
· In case of delays, the Bill has sought to end the unevenness which was solely in favour of property developers. Now, both the consumer and developer will have to pay the same rate of interest for any delay on their part.
· This law makes it mandatory for developers to post all information on issues such as project plan, layout, government approvals, land title status etc with the state Real Estate Regulatory Authority (RERA) and then in effect pass this information on to the consumers.
· The developer cannot make any changes to the plan that had been sold, without the written consent of the buyer. This puts an end to a common practice by developers to increase the cost of projects.
· Bill contains provision for imprisonment up to three years in case of promoters and up to one year in case of real estate agents and buyers for violating orders of appellate tribunals; or would be levied monetary penalties; or both.
Passing of this key piece of legislation holds great importance for the government’s ambitious "Housing for All" and "Smart Cities" initiatives. The corporate world has given a thumbs up for clearance of the Real Estate Bill.
Reacting to the news the BSE Realty Index was trading higher by more than 2.5 per cent. Major gainers include DLF, Sobha Developers, Indiabulls Realty and Ashiana Housing which were trading up by 3 to 4 per cent.