Cabinet okays changes to realty bill

Restores earlier clause on 70% sale proceeds in escrow a/c; developer responsibilities tightened, beside other pro-consumer changes

The Cabinet approved some amendments to the Real Estate (Regulation and Development) Bill, in the making since 2009. The latest changes were based on a report from a Rajya Sabha committee.

In April, the government cleared a few amendments to the earlier version and introduced it in the Rajya Sabha. It was referred to a committee after opposition parties said it was 'pro developer'.

In the latest shape, developers will have to deposit 70 per cent of sale proceeds, including land cost, in a separate escrow account. The present government had earlier brought this down to 50 per cent; its predecessor had approved 70 per cent.

Also, an equal rate of interest has to be paid by promoters and buyers if any default or delay. Currently, developers pay only two to three per cent in case of default but a buyer pays 16-18 per cent for any on his side, say those in the know.

Apart from three years imprisonment for developers proposed by the government, the liability of promoters for structural defects has been increased from the earlier two years in jail to five years. Developers will have to register all projects with at least 500 sq metre area or eight flats with the proposed regulatory authority, instead of the earlier proposed 1,000 sq mt and 12 flats. At least half the sale proceeds will have to be kept in a separate bank account and used only for the construction.

Carpet area has to be clearly defined to include usable spaces. The garage is now out of the definition of an apartment; it is separately defined. Formation of allottee associations would now be mandatory within three months of allotment of a majority of units in a project, so that the buyers get to manage facilities like a common hall or club house.

Aggrieved buyers can approach all district consumer courts, instead of only the proposed regulatory authorities.

Allottees will have to take possession of a house within two months of issuance of the occupancy certificate. This will prevent delaying of registration, resulting in denial of revenue to the respective states in the form of stamp duties and other charges.

Appellate Tribunals are now required to adjudicate cases in 60 days, against the 90 days earlier proposed

Earlier, the government had brought commercial real estate under the ambit, apart from the residential segment. Developers will need consent of two-third of buyers for changing a project plan.