Govt okays real estate bill with few changes
In its bid to come out with a strong pro-consumer law to protect home buyers, the Centre on Wednesday approved 20 changes in the Real Estate (Regulation and Development) Bill including the enabling provisions for insurance of land title to avoid risk of losing investment. It also carries a provision for imprisonment up to three years or penalty or both in case of builders, one year for both real estate agents and buyers for violating the orders of appellate tribunals.
Another major change in favour of consumers is mandatory keeping of 70% of the sale proceeds for a particular project in a separate account to meet the construction cost of that project, which also includes the land cost. Moreover, the regulatory authorities can grade projects along with grading of promoters to help buyers take the right decision while booking a property.
In order to make states comply with the norms, the bill provisions that they will have to make the rules within six months of notification of the proposed Act. Each state will establish a real estate regulator and an appellate tribunal as per the rules. The tribunal will be the final arbiter in case of disputes between a buyer and builders or promoters. Either party can approach the tribunal if the dispute is not settled by the real estate regulator.
“The provision for arranging insurance of land title will bring greater confidence in buyers and builders as well since they will get back their entire investment from the insurance company in case the title is held invalid. Such instances have happened in some cases recently,” said a housing ministry official. The bill aims to protect interest of at least 10 lakh buyers annually and promoting investments in the real estate sector.
The Cabinet approved the bill after government held rounds of meetings with all stakeholders and incorporated recommendations of the parliamentary panels. It is keen to table the bill in Parliament during the ongoing session since there is little protection for consumers in the present framework.
It also provisions that the consumer has the option to approach consumer forums at district level instead of only the regulatory authorities proposed to be set up under the bill for redressal of grievances.
Moreover, to ensure that the regulatory authorities don’t delay the cases, the bill has a provision for disposing off complaints in 60 days while no such time limit was indicated in the earlier bill. Similarly, the appellate tribunals need to adjudicate cases in 60 days as against 90 days as proposed earlier.
Some of the other key provisions of the revised bill include mandatory registration of projects of 500sqm area or eight flats with regulator instead of 1,000 sq metre or 12 flats as proposed earlier.
The bill has also incorporated the mandatory provision for formation of allottees associations such as RWAs within three months of allotment of majority of units so that buyers get to manage community facilities like common hall, club house and reading room.
According to the changes, the liability of promoters for structural defects has also been increased to five years from the earlier provision of two years.
Source: Dipak Dash, The Times of India, Chennai