In a bid to boost foreign investment in India's $100 billion real estate sector, name an independent watchdog, protect consumers and fast-tack disputes, the cabinet on Tuesday approved some changes in the relevant bill for parliament to consider.
According to an official note, the cabinet approved amendments to Real Estate (Regulation and Development) Bill, 2013 that is pending in the Rajya Sabha, based on the suggestions from a parliamentary standing committee and all stakeholders and experts.
One of the principal changes that the cabinet has approved is to include commercial real estate as well within the ambit, as opposed to just residential projects in the bill that is before the Rajya Sabha.
"The Real Estate (Regulation and Development) Bill is a pioneering initiative to protect the interest of consumers, promote fair play in transactions and ensure timely execution of projects," the note said after the meeting presided over by Prime Minister Narendra Modi.
According to data released by the Department of Industrial Policy and Promotion, India's construction development sector received foreign direct investment inflows of $24 billion between April 2000 and December 2014.
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The realty industry is considered the second-largest employer after agriculture and various studies have pegged its growth at 30 percent over the five years to top $180 billion by 2020. Yet, there are issues preventing the sector from realising its potential, they said.
The note said the real estate and housing sector was largely unregulated and opaque in India with consumers often being unable to procure complete information, or to assign accountability against developers in the absence of effective regulation.
The new bill provides for registration of realty projects and agents with the regulator and draws up functions and duties of promoters and allottees. It also seeks mechanisms to fast track dispute settlement and assigns penalties for offences and defaults.
"The measures are expected to boost domestic and foreign investment in the sector and help achieve the objective of the government to provide housing for all by 2022 through enhanced private participation, the official note said.
"The bill aims at restoring confidence of the general public in the real estate sector by instituting transparency and accountability in real estate and housing transactions," said the note.
"This in turn will enable the sector to access capital and financial markets essential for its long term growth. The Bill will promote orderly growth through consequent efficient project execution, professionalism and standardization."
The main facets of the bill include:
- Coverage of both residential and commercial real estate
- Establishment of one or more real estate regulatory authority in each state
- Appointment of more adjudicating officers to settle disputes and impose compensation
- Mandatory registration of projects and agents
- Mandatory disclosure of all relevant information on projects
- Accountability towards advertisement for sale or prospectus
- Compulsory deposit of 50 percent of realized amount for projects in separate account
- Bar on promoters from altering plans, structural designs and specifications
- Right for allottees to obtain stage-wise time schedule of project
- Refund with interest and compensation for default by promoter
- Faster dispute settlement with more adjudicating officers and tribunal to hear appeals
- Establishment of central advisory council for views on developing sector.
