Real Estate (Regulation and Development) Bill 2013
Real Estate (Regulation and Development) Bill 2013.
So some progress here. The Real Estate (Regulation and Development) Bill 2013, has moved ahead. The cabinet has approved certain amendments to the bill. In Feb 2014, the Standing Committee on Urban Development (Chaired by Sharad Yadav) that reviewed bill, came up with certain amendments. Now, after a year, some of those amendments have been accepted and now there is at least an indication on the part of the government that it wants to move the bill ahead. Clearly a good sign. But it’s not over until, as they say, the fat lady sings.
In its current form, the bill is reasonably promising from a customer’s perspective. Let’s take a look some of the items that are now proposed.
- It covers both residential and commercial projects. (Commercial projects added based on recommendation of Standing Committee)
- Real Estate Regulatory Authority (RERA) in each State / Union Territory to settle disputes and compensate affected parties. All projects will have to get mandatorily registered with RERA and provide all the details of the plot and the apartments that the builder plans to construct and sell.
- Details of the promoters, project, layout plans, development works, land approvals status, statutory approvals, pro forma agreements, names and addresses of authorized brokers, consultants etc. need to be disclosed for the public.
- Promoters to deposit 50% of the amounts collected from the customers of the project in a separate escrow account with a scheduled bank within 15 days of the receipt of the money. This is to prevent diversion of funds and also to ensure that funds are used for the purpose they are actually meant for, i.e. Construction of the project.
- Can the builder alter the plan of the building or structural designs specifications etc.? Yes he can, but he needs to get consent of at least 2/3rds of the allottees of the project.
- The bill will cover ongoing projects that have not received completion certificate yet. These projects will need to be registered with the regulator within 3 months.
- States will need to make individual rules for regulation of the builders in their states and have been advised to operate within deadlines specified in the bill. They need to set up a web based online system for acceptance of applications for registration of projects within one year. And thereafter clear decisions within 60 days.
- If any builder violates the rule of registering the project, there is a proposed penalty equivalent to 10% of the project cost and additional penalty of the same amount if failure to respond to demand for payment of penalty. There is an option of imprisonment of the builder as well.
- Wrong disclosure of information will attract 5% of the project cost as penalty.
- In case of repeated violations, the project could be cancelled as well.
There is promise in the contents of the bill. Let’s just hope that it progresses fast and reaches a stage of implementation.
Connect with us at [email protected] or contact us through our website for any assignments related to real estate or retail finance. Do visit our Projects Executed page to know more about the different types of projects we have completed.