 "A regulator to ease your concerns")
Real estate buyers probably did not have too many options but to seek redressal of their grievances through consumer forums. Even then, buyer agreements were always favourably tilted towards the developer and often against a buyer's interest. Now with the Cabinet clearing the Real Estate (Regulation and Development) Bill, not only will builders' disclosures and transparency on projects increase, it will also allay buyers' fears and concerns, and speedily redress grievances.
Measures that will bring relief to home buyers include setting up of a real estate regulator, making it mandatory for builders to launch projects only after securing all approvals, clarifying carpet area, paying refund to customers in case of delay in projects and showing only actual photographs of the project in brochures.
A positive proposal is the refund to be paid to buyers in case the builder delays giving possession of the flat. Sanjay Dutt, executive managing director (south Asia), Cushman & Wakefield, says that the delivery of the property is linked to its price. The property price appreciates between the time the buyer pays for it (while it is under construction) and when he gets delivery. "Most buyers buy property after taking loans from banks. If the project is delayed for more than one-two years, then the buyers' interests have to be protected,'' he says.
Consumer activist Jehangir Gai points out that normally, builders charge a high rate of interest if the flat buyer delays making payments. But if the builder delays handing over the flat, the rate of interest that is charged is a nominal eight per cent. The Bill has proposed to remove this difference and provides that the rate of interest payable by the home buyer in case of delayed payment, should not exceed the interest payable by the builder in case of delay. This is also a good move.
However, the Bill should have also hold central and state government authorities responsible for not delaying approvals for projects, which is often the reason for delays in completion of the project, Dutt adds.
The provision for setting up the real estate regulatory authority is another positive step, says Samir Jasuja, founder and CEO of PropEquity. "Having a regulator will make most developers accountable and will also ensure that consumers will get what they were promised,'' he says.
However, according to Gai, provisions in the Bill which say that no court or other authority has the power to stay any order that has been taken under this act, is anti-consumer. This essentially means consumers can now approach only the Real Estate Appellate or Tribunal in case of any dispute, which might not always be feasible, he points out.
Another dichotomy is the definition of open spaces. As of now, the Supreme Court has ruled that open space belongs to the society and its sale is illegal. In the new Bill, open spaces are included under the definition of 'apartment' and it permits builders to legally sell open spaces like parking space, terrace and garden for independent and private use, points out Gai.
Measures that will bring relief to home buyers include setting up of a real estate regulator, making it mandatory for builders to launch projects only after securing all approvals, clarifying carpet area, paying refund to customers in case of delay in projects and showing only actual photographs of the project in brochures.
A positive proposal is the refund to be paid to buyers in case the builder delays giving possession of the flat. Sanjay Dutt, executive managing director (south Asia), Cushman & Wakefield, says that the delivery of the property is linked to its price. The property price appreciates between the time the buyer pays for it (while it is under construction) and when he gets delivery. "Most buyers buy property after taking loans from banks. If the project is delayed for more than one-two years, then the buyers' interests have to be protected,'' he says.
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Recently, a consumer court asked Unitech Ltd to pay Rs 14 lakh to a consumer, who had not got possession of his flat even after six years. He had paid over Rs 1 crore in 2007. The consumer court ruled he should be given the rent paid by him for all this years. As of now, the only option consumers have in case of delay is to approach the court or consumer forums. But this can often take a long time. Since the new Bill makes provision for payment of refund in case of delay, hopefully, such delays will not happen, says Dutt.
Consumer activist Jehangir Gai points out that normally, builders charge a high rate of interest if the flat buyer delays making payments. But if the builder delays handing over the flat, the rate of interest that is charged is a nominal eight per cent. The Bill has proposed to remove this difference and provides that the rate of interest payable by the home buyer in case of delayed payment, should not exceed the interest payable by the builder in case of delay. This is also a good move.
However, the Bill should have also hold central and state government authorities responsible for not delaying approvals for projects, which is often the reason for delays in completion of the project, Dutt adds.
The provision for setting up the real estate regulatory authority is another positive step, says Samir Jasuja, founder and CEO of PropEquity. "Having a regulator will make most developers accountable and will also ensure that consumers will get what they were promised,'' he says.
However, according to Gai, provisions in the Bill which say that no court or other authority has the power to stay any order that has been taken under this act, is anti-consumer. This essentially means consumers can now approach only the Real Estate Appellate or Tribunal in case of any dispute, which might not always be feasible, he points out.
Another dichotomy is the definition of open spaces. As of now, the Supreme Court has ruled that open space belongs to the society and its sale is illegal. In the new Bill, open spaces are included under the definition of 'apartment' and it permits builders to legally sell open spaces like parking space, terrace and garden for independent and private use, points out Gai.