REAL ESTATE BILL - FEATURES & BENEFITS (For home buyers, developers and sector)

The Rajya Sabha passed the much-awaited Real Estate Bill on Thursday, prompting PM Narendra Modi to hail it as "great news for home buyers". The bill, which seeks to regulate the property sector, bring in transparency and help protect consumer interests, is now slated to be taken up by the Lok Sabha on Monday. Here are key features of the bill:

1. All projects will have to be registered with regulatory authorities, and developers will have to disclose project information including details of the promoter, project, layout plan, land status, status of approvals and agreements along with details of real estate agents, contractors, architects and structural engineers.
2. There will be no discrmination of any kind on basis of religion, region, caste, creed or sex and gender and we will include that in the rules. The government may bring in a "non-discriminatory" clause to allow anyone (including a transgender) to buy property in a complex. When some House members raised the issue of discrimination in selling flats and plots to certain communities, Urban development minister M Venkaiah Naidu said the constitution provides equality for all
3. Builders will have to deposit a minimum of 70% collections from buyers in an escrow account to cover cost of construction and land. State-level Real Estate Regulatory Authorities will be established to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover.
4. No pre-launch will be allowed without getting all approvals from the local authorities and without obtaining registration from the regulator. All incomplete projects are to come under the regulation.
5. The bill covers any project that is more than 500 sq m or has more than eight apartments (states can lower this requirement further).
6. Builders can no longer go scot-free by putting up flashy designs or photographs of a project to attract buyers and failing to deliver projects that match the pictorial claims.
7. The bill states the builder has to return the payment with interest to buyers who are affected by such "incorrect, fast statements contained in the notice, advertisement or prospectus or the model apartment, plot or building as the case may be".
8. It provides for imprisonment of up to three years for promoters and up to one year for real estate agents and buyers and/or monetary penalties if they violate orders of appellate tribunals.
9. The authority can even order "compensation" to consumers in case of misleading advertisements.
10. In addition, developers will have to provide brief details of projects launched in the past five years, both completed or under-construction, and the current status of the projects. These may be made available on the regulator's website so buyers can take an informed decision.

What it holds

As of now the real estate sector was largely unregulated in India. If a consumer had a complaint against a developer he would had to make rounds of consumer or civil courts. Also absence of standardization and lack of adequate consumer protection has constrained the healthy and orderly growth of the industry. Not anymore. Once the bill becomes an Act, in case of any grievance, the consumer can go to the real estate regulator for redressal.

Take a look at how the Bill will benefit the sector, homebuyers and developers:

How the bill will benefit real estate sector

• Promote timely execution of projects thereby achieving the objective of housing for all
• Ensure speedy adjudication of disputes and orderly growht of the real estate sector through efficient project execution, professionalism/standardization
• Bill aims at restoring confidence of consumer in the real estate sector by institutionalising transparency and accountability
• Like other sectors such as telecom, electricity, banking, securities insurance etc provides for specialised regulations and enforcement
• Will boost domestic and foreign investment in the sector and help promote private participation
• Illegal and unplanned development due to absence of regulator would end

How the bill will benefit home-buyers

• Make operations transparent, promoting informed choice for buyers
• Disclosure of ‘carpet area’ for sale will curb unfair trade practices
• Model agreement would end one-sided agreements
• Time and cost overruns due to funds diversion will be controlled
• Will help curbbblack money and speculation leading to price controls
• Indefinite delay in dispute resolutions in civil courts will end
• Bill provides curative and preventive measures with powers to enforce specific performance unlike consumer protection laws

How it will benefit developers

• Weed out fly-by-night operators from the sector
• Will infuse credibility by making the sector mature on the lines of securities, banking, nsurance etc
• Channelise investment into the sector:
• Huge unsold stock as consumer confidence is low
• Bill would restore investment sentiment of consumers and help address inventory pile-up

National Housing bank and financial institutions have demanded enactment of bill as lending is very risky without regulatory mechanism in place
Foreign investment (FDI/ECB) not showing interest in India’s real estate sector due to regulatory volume.

The builders will also benefit from the proposed legislation, as it proposes to impose penalty on allottee for not paying dues on time. Also the builder will have the opportunity to approach the regulator in case there is any issue with the buyer.

But, builders believe that the bill was heavily stacked against them. The bill provides for penalty, upto 10 per cent of the total project cost or even imprisonment, if builders do not honour their commitment or fail to register themselves with the regulator.

History of the Bill

The Real Estate (Regulation and Development) Bill, 2013 was introduced in the Rajya Sabha on August 14, 2013. It was referred to the department related Standing Committee of Parliament on September 23, 2013. The Standing Committee had laid its report in the Rajya Sabha on February 13, 2014 and in the Lok Sabha on February 17, 2014.

The Bill was referred to the Select Committee along with the amendments proposed by the Government as well as by the private members. The Committee held 17 sittings, of which 8 sittings were held outside Delhi. The Committee heard 445 witness in all at different places.