In December 2014, Indian parliament will have Real Estate Regulation & Development 2013 for discussions after it got approval from Union Cabinet last year.
The real estate market have both positive and negative views, nevertheless everyone are optimistic as Real Estate Regulatory bill endeavors to bring clarity, transparency, minimize risk for consumers, and benefits for honest builders and developers. Also, regulate launching, development, marketing, advertising and promotion of real estate projects by builders and developers.
Moreover, with Appellate Tribunal for real estate, consumers will have stronger protection of their rights, and proper dispute resolution mechanism installed.
However, who’re against the Real Estate Regulatory opines that it will slower the process further, benefit only large developers and builders, spread insecurity in small & mid-sized realtors, and increase red tape.
Now the first question comes to mind, Why India needs Real Estate Regulation and Development Bill?
India needs this bill because of –
- Increasing irregularities, disputes and frauds in real estate industry
- Ambiguous rules and regulations controlling real estate industry
- Lack of consumer rights protection, and awareness
- Non-existent grievance redressal mechanism
- Ineffective and inefficient state real estate authorities
Though Real Estate Regulation and Development Bill is being introduced to regularize vastly unorganized real estate industry but still there’s no clarity for the layman.
To help you best, we’re providing you with major highlights of the bill.
1. RERA (Real Estate Regulatory Authority) will be created – this bill will create RERAs at state level that will regulate residential real estate transaction between sellers and buyers.
2. Real Estate Appellate Tribunal will also be created – bill has paved way for Real Estate Appellate Tribunal, which will work as a watchdog and deal with real estate disputes, and decisions of RERA.
3. Mandatory to Take All Clearances Before Launching – with this bill it will become mandatory for all residential developers and builders in India to take all clearances before launching their project, advertise and market.
4. Mandatory RERA Registration of Residential Projects and Agents – it will be mandatory for developers to register residential projects, and for agents to sell units from these projects, they will need to register.
5. Submission of Clearances to RERA – it will be mandatory for real estate developers before launch to submit all clearances and information regarding construction, layout, work & land status, promoters and others to RERA, which RERA will make available on its official website to public.
6. Restriction on taking Advance Payments – developers and builders will not be allowed to take more than 10% in advance payments from customers.
7. 70% of Deposit to be used for Development, while 30% for Purchasing Land – there’s lot of disagreement with this clause, as many suggests that in some cases land cost can escalate more than 30%, which will force developers to take bank loan eventually increasing the total cost.
8. Penalties and Jail Term for Non-compliant builders and developers – RERA will have authority to initiate inquiry/investigation, and impose penalties up to 10 percent of the total cost, or imprisonment.
9. RERA will have authority to cancel – if any point RERA finds discrepancy or compromise or non-compliance, then RERA can immediately cancel the project, and ask another competent authority to complete the project instead.
10. Appellate Tribunal will be available to appeal against RERA decision & disputes – Appellate Tribunal will work as grievance redressal machinery, which will accept appeals against RERA’s decisions and disputes.
These were the key highlights of Real Estate Regulation and Development bill 2013. The key points that are cause of disagreement and highly debatable are –
- Separate bank account with 70% deposit for construction
- Penalties and jail term
- Red tape and sluggish bureaucratic process
Overall, this bill endeavors to make real estate industry transparent, efficient, risk-free, consumer friendly and organized. And it can be viewed a logic step ahead as we’re expecting huge investment in coming years in real estate section, therefore regularization becomes inevitably important.
What are your opinions about the Real Estate Regulatory Bill, will it bring constructive changes? Voice your opinions using comment section below.