)
A proposal would be soon sent to M Venkaiah Naidu, housing and urban poverty alleviation minister, for approval and then to the Cabinet, according to a ministry official. “The Bill is expected to be brought to Parliament in the monsoon session.”
The Bill now aims to regulate only residential real estate, protect buyers from erring developers and usher in transparency. It has been revised many times since its formation in 2009. The Bill has proposed stricter penalties and even a jail term of up to three years for erring developers.
The Bill was introduced in the Rajya Sabha in August and referred to Parliament’s Standing Committee on Urban Development. The panel had suggested that commercial and industrial sectors be included. The Bill excludes projects smaller than 1,000 square metre or 12 apartments from its purview, but the panel wanted to lower this to 100 square metre and three apartments. “It can be reviewed later, once the implementation starts,” an official said.
Samantak Das, chief economist, director, research and advisory services, Knight Frank India, said a regulator was needed mainly for the residential segment. “Commercial real estate is a kind of business venture and is self-regulated. Occupiers are there on a lease basis. One has to look to safeguard interests of retail investors which are there in the residential sector."
A real estate regulator should also look at the authorities who give approvals, he added.
The industry has been opposing the introduction of the Bill. They have raised concerns over strict penalties/punishment to be imposed on developer if they fail to comply with certain provisions. It also makes it mandatory for developers to launch projects only after acquiring all the statutory clearances from relevant authorities.
The Bill is aimed at providing regulation in the sector, besides protecting buyers from erring developers and usher in an era of transparency. The real estate sector has been away from any sort of regulation till now. It has also proposed stricter penalties and even jail term for a maximum of three years for developers.
The development assumes significance in the wake of rising consumer complaints against developers for delaying projects by over 4-5 years, with no mechanism to curb the delays. On the contrary, if a buyer defaults on payment, he has to pay high interests while developers escape through loopholes in the sale agreements.
The Bill, which has been in the making for about over years now, also mandates developers to keep aside about 70 per cent of the collected amount from buyers in a separate account.
Besides, it has certain tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of actual site. Failure to do so for the first time would attract a penalty which may be up to 10 per cent of the project cost and a repeat offence could land the developer in jail for a maximum of three years.
It provides for a clear definition of the 'carpet area' and would prohibit private developers from selling houses or flats on the basis of ambiguous 'super area'.
