The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today
gave its approval to amendments to the Real Estate (Regulation and Development)
Bill, 2013 pending in the Rajya Sabha, and approved amendments proposed in the
Bill. The recommendations of the Standing Committee of Parliament on Urban
Development and suggestions of various stakeholders (consumer organizations,
industry associations, academia, experts etc.) have also been included after
extensive consultations.
The Real Estate (Regulation and Development) Bill is a pioneering
initiative to protect the interest of consumers, to promote fair play in real
estate transactions and to ensure timely execution of projects.
The Bill provides for a uniform regulatory environment, to protect
consumer interests, help speedy adjudication of disputes and ensure orderly
growth of the real estate sector. The Bill contains provisions of registration
of real estate projects and registration of real estate agents with the Real
Estate Regulatory Authority; functions and duties of promoters and allottees;
establishment of Real Estate Regulatory Authority; establishment of fast track
dispute resolution mechanism through adjudication; establishment of a Real
Estate Appellate Tribunal; offences and penalties etc.
These measures are expected to boost domestic and foreign investment in
the sector and help achieve the objective of the Government of India to provide
‘Housing for All by 2022’, through enhanced private participation.
The Bill ensures mandatory disclosure by promoters to customers through
registration of real estate projects as well as real estate agents with the
Real Estate Regulatory Authority. The Bill aims at restoring confidence of the
general public in the real estate sector; by instituting transparency and
accountability in real estate and housing transactions. This in turn will
enable the sector to access capital and financial markets essential for its
long term growth. The Bill will promote orderly growth through consequent
efficient project execution, professionalism and standardization.
The Bill is expected to ensure greater accountability towards
consumers, and to significantly reduce frauds and delays. The Bill is also
expected to promote regulated and orderly growth through efficiency,
professionalism and standardization. It seeks to ensure consumer protection,
without adding another stage in the procedure for sanctions.
The salient features of the Bill are
as under:
a.
Applicability
of the Bill:
The
proposed initial Bill was applicable for residential real estate. It is now
proposed to cover both residential and commercial real estate;
b.
Establishment
of Real Estate Regulatory Authority:
·
Establishment of one or more ‘Real Estate Regulatory Authority’ in each
State/ Union Territory (UT), or one Authority for two or more States/UT, by the
Appropriate Government for oversight of real estate transactions,
·
To appoint one or more adjudicating officers to settle disputes and
impose compensation and interest;
c.
Registration
of Real Estate Projects and Registration of Real Estate Agents:
Mandatory registration of
real estate projects and real estate agents who intend to sell any plot,
apartment or building, with the Real Estate Regulatory Authority;
d.
Mandatory
Public Disclosure of all project details:
Mandatory public
disclosure norms for all registered projects such as details of promoters,
project, layout plan, plan of development works, land status, status of
statutory approvals and disclosure of proforma agreements, names and addresses
of real estate agents, contractors, architect, structural engineer etc.;
e.
Functions
and Duties of Promoter:
· Disclosure of all relevant
information of project;
· Adherence to approved plans and
project specifications;
· Obligations regarding veracity of the
advertisement for sale or prospectus;
· Rectify structural defects;
· Refund money in cases of default;
f.
Compulsory
deposit of 50 percent:
To compulsorily deposit 50
percent (or such lesser percent as notified by the Appropriate Government) of
the amounts realized for the real estate project from the allottees in a
separate account in a scheduled bank within a period of fifteen days to cover
the cost of construction to be used for that purpose;
g.
Adherence
to declared plans:
· To bar the promoter from altering
plans, structural designs and specifications of the plot, apartment or building
without the consent of two-third allottees after disclosure;
· However, minor additions or
alterations permissible due to architectural and structural reasons;
h.
Functions
of Real Estate Agents:
· Real estate agents to sell properties
registered with the Authority;
· Maintain books of accounts, records
and documents;
· Not to involve in any unfair trade
practices;
i.
Rights and
Duties of Allottees:
· Right to obtain stage-wise time
schedule of project;
· Claim possession as per promoter
declaration;
· Refund with interest and compensation
for default by the promoter;
· Allottees to make payments and
fulfill responsibilities as per agreement;
j.
Functions
of Real Estate Regulatory Authority:
The Authority to act as
the nodal agency to co-ordinate efforts regarding development of the real
estate sector and render necessary advice to the appropriate Government to
ensure the growth and promotion of a transparent, efficient and competitive
real estate sector;
k.
Fast Track
Dispute Settlement Mechanism:
· Fast track dispute resolution through
adjudicating officers (District Judge);
· Appellate Tribunal to hear appeals;
l.
Establishment
of Central Advisory Council:
To advise the Central
Government on implementation of the Act, recommend policy, protection of
consumer interest and to foster growth and development of the real estate
sector;
m.
Establishment
of Real Estate Appellate Tribunal:
Real Estate Appellate
Tribunal to hear appeals from orders of the Authority and the adjudicating
officer. The Appellate Tribunal is to be headed by a sitting or retired Judge
of the High Court, with one judicial and one administrative/technical member;
n.
Punitive
Provisions:
Punitive provisions
including de-registration of the project and penalties in case of contravention
of provisions of the Bill or the orders of the Authority or Tribunal;
o.
Bar of
Jurisdiction Courts:
Provision for barring
jurisdiction of court and any authority from entertaining complaints in respect
of matters covered under the Bill;
p.
Power to
make Rules and Regulations:
· Appropriate Government to have powers
to make rules over subjects specified in the Bill;
· Regulatory Authority to have powers
to make regulations;
Background:
Real estate development and housing construction was largely the
concern of State institutions till the 1980s with very few private promoters
and a nascent industry. With the liberalization of the economy, conscious
encouragement was given to the growth of the private sector in construction,
with a great deal of success, and the sector today is estimated to contribute
substantially to the country’s GDP.
Currently, the
real estate and housing sector is largely unregulated and opaque, with
consumers often being unable to procure complete information, or to enforce
accountability against builders and developers in the absence of effective
regulation.
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AKT/NT/SH