New Delhi: Narendra Modi government Wednesday reached out to the Opposition including the Congress by agreeing to incorporate in the The Real Estate (Regulation and Development) Bill 2015, a provision requiring real estate developers to deposit 70 percent of the project cost in a separate escrow account.
Congress and CPI(M) has demanded this provision specifically to be included in the proposed Bill.
Union Cabinet chaired by Prime Minister Narendra Modi approved several amendments to the Real Estate (Regulation and Development) Bill, 2015 aimed to protect the interests of buyers while at the same time promoting investments in the sector.
According to a senior Urban Development Ministry official, the government has gone beyond the recommendations of the Select Committee of Rajya Sabha which has recommended the minimum 50 percent of sale proceeds shall be deposited in a statement account.
The decision of cabinet today has significantly improved the prospects of the Real Estate (Regulation and Development) Bill 2015 being passed in the current session provided the Congress allowed normal functioning of Parliament.
There are several changes in the Bill based on the recommendations of the Select Committee of Rajya Sabha that has examined the Bill pending in Rajya Sabha and the official amendments proposed earlier.
The Bill provides uniform regulatory environment to ensure speedy adjudication of disputes and orderly growth of the real estate sector. It will boost domestic and foreign investment in the Real Estate sector and help achieve the objective of Government of India to provide ‘Housing for All’ by enhanced private participation.
The amendments piloted by the Housing and Urban Poverty Alleviation Minister M Venkaiah Naidu include mandatory registration with Real Estate Regulatory Authorities of projects of 500 sq mt area or 8 flats instead of 1,000 sq mt or 12 flats earlier proposed.
This enables registration of more projects with the regulatory authority there by according protection to buyers on a large scale.
The Real Estate (Regulation and Development) Bill is a pioneering initiative to protect the interest of consumers, promote fair play in real estate transactions and to ensure timely execution of projects.
Project developers will now be required to deposit at least 70 percent of sale proceeds to be announced by state governments of a project in a separate escrow account to meet the construction cost.
Earlier proposal in this regard was 50 percent or less of sale proceeds.
Other major changes approved by the Cabinet in the Real Estate (Regulation and Development) Bill, 2015 include equal rate of interest to be paid by promoters and buyers in case of default or delays, regulatory authorities can register projects to be developed beyond urban areas and liability of promoters for structural defects has been increased from the earlier 2 to 5 years.
Carpet area clearly defined to include usable spaces like kitchen and toilets imparting clarity in the matter which was not the case earlier has also been included.
Garage is now to kept out of the purview of definition of apartment and is separately defined and formation of Allottees Associations is now mandatory within 3 months of allotment of majority of units in a project so that buyers get to manage facilities like common hall, club house, reading room.
Aggrieved buyers can now approach 644 Consumer Courts which are available at district level in the country instead of only the Regulatory Authorities proposed to be set up under the Bill, mostly in capital cities, for redressal of grievances. This makes it easy for buyers besides reducing the costs of seeking redressal.
Besides reference and definition of bulk purchaser now removed which is expected to promote investments in real estate sector an an enabling provision for arranging insurance of land title, currently not available in the market has been incorporated. This benefits both buyers and sellers in case the title is held invalid as had happened in some cases recently.
Regulatory Authorities would promote single window system of clearances for real estate projects benefiting the sector and can now grade projects along with grading of promoters besides ensuring much desired digitization of land records.
Regulatory Authorities will now be required to make regulations within 3 months of its formation as against 6 months earlier proposed.
States will now have to make Rules within 6 months of notification of the proposed Act as against one year earlier proposed and allottees shall take possession of houses in 2 months of issuance of occupancy certificate. This prevents delaying registration resulting in denial of revenues to the respective states in the form of stamp duties and registration charges.
Chairmen and Members of Regulatory Authorities and Appellate Tribunals are barred from taking up post-retirement jobs except in government and statutory bodies.
Additional Benches of Appellate Tribunals can be set up in a state if required for speedy adjudication of grievances.
New provision for imprisonment upto 3 years in case of promoters and upto one year in case of real estate agents and buyers for violation of orders of Appellate Tribunals.
Appellate Tribunals now required to adjudicate cases in 60 days as against 90 days earlier proposed and Regulatory Authorities to dispose off complaints in 60 days while no such time limit was indicated earlier.
With all these major amendments to the Real Estate Bill first moved in 2013, the Real Estate (Regulation and Development) Bill, 2015 is expected to protect the interests of large number of buyers besides promoting fair play in real estate transactions and ensuring timely execution of projects.
The Bill aims at enhancing the credibility of the important real estate sector by restoring confidence of consumers in the sector, by promoting transparency and accountability besides promoting orderly growth of the sector through efficient execution of projects, professionalism and standardization.
According to a real estate research agency, 10 lakh consumers buy houses every year with an investment of about 3.50 lakh crores in residential segment. About 3,200 to 4,000 new projects are launched every year. At present about 17,000 real estate projects are in progress in 26 major urban agglomerations in the country which also will come under the ambit of the proposed Bill.