The Real Estate (Regulation and Development) Bill, 2016 is finally passed by the Rajya Sabha on 10th March 2016 and is gifted to the nation by our Prime Minister, Shri Narendra Modi. How this bill will bring out cheers to our buyers? Is it doing some sort of disfavour to the Real Estate Sector? Will benefit to the buyers will lead builders in trouble?
Real Estate sector which is highly vulnerable to black money will be greatly hit by passage of the bill. Let’s have a glimpse:
1. The Bill envisages that 70 % of the money deposited by buyers as advances will be kept in a separate bank account and the funds can be utilised by the builders for meeting out cost of land plus construction costs.
This means that the diversion of funds will not be allowed and it will ensure timely completion of the projects. In case the land cost has already been paid, then the money can also be withdrawn upto that extent.
2. The Real Estate Regulatory Authority will be set up under clause 32(b) for ensuring time bound project approvals and clearances. It will speed up the process of grievances redressal. With the establishment of a regulatory mechanism, domestic and international investment will be increased, thereby resulting in decrease in cost of borrowing.
3. The builders will be barred from pre launching of any project till the registration is approved by the regulatory authorities. That means no funds can be diverted to any project until all the registration formalities are complied with.
4. No gender or caste discrimination of any sort with regards to ownership transfer of plots or land will be allowed to practice in any case.
5. Now, developers will have to disclose beforehand all the project related information to the buyers including promoters, project plan and layout, approvals by the competent authorities, agreements along with information regarding real estate agents, contractors, architects, structural engineers, etc.
6. Carpet Area will be the basis of selling property and not super built area which is in practice so far. Any violation may attract penalty and imprisonment upto 3 years which is certainly going to make the situation difficult to survive for the real estate industry which is taking the benefit of luring the customers by flashy photographs and designs.
7. If the project gets delayed from builders side, and possession is transferred after the agreed period, then they will have to pay the same rate of interest to the buyers which they are charging from them in case of delayed payments. This means it will not so easy now to delay the projects and divert the proceeds elsewhere. Concept of unfair interest will go be done away.
8. Single window approval system is being developed to standardise and settle timelines for approvals and use of IT and GIS for automation of the systems. No more hassles will be faced regarding where to knock in case your agreed conditions are breached by the contractors.
The Real Estate Bill will fulfil the dreams of home buyers for living in their own houses while penalising the defaulting builders and ensuring timely completion of the projects. But still there are some loopholes to be looked into since the move will be fruit for one and thorn for another.