Union Cabinet approves Real Estate Regulatory Bill A Bill providing for setting up a regulator for the real estate sector and having provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly was approved by the government Tuesday. The Real Estate (Regulation and Development) Bill, approved by the cabinet, seeks to provide a uniform regulatory environment to the sector. It also intends to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities. Builders and developers who become repeat offenders may even face a jail term of up to three years. The Bill makes it mandatory for builders to clarify the carpet area of the flat. This would be made uniform for the entire country. This rule would make the concept of super area - which is often used to mislead owners - virtually non-existent. The Bill has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction, sources said. The proposed legislation has tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of the actual site. Failure to do so for the first time would attract penalty which may be up to 10 percent of the project cost and a repeat offence could land the developer in jail. The Ministry of Housing and Urban Poverty Alleviation is working on bringing all projects under a single-window clearance. While the Airports Authority of India and municipal bodies have come on board, there are some objections from the Environment Ministry which are being looked into. Ministry sources said 22 states had given their approval to the Bill while five states wanted certain amendments. These changes have been incorporated in the Bill cleared by the Cabinet today, sources said. Chhattisgarh is the sole state to still oppose the Bill. Builders and developers will have to get all clearances - from title deed to project cost - cleared before construction begins. FAR (Floor Area Ratio) will also have to be specified clearly by the builder. While the Regulator in the states will be appointed by the state governments, in Delhi the Urban Development Ministry will appoint the regulator. DDA is likely to be made the regulator in Delhi, sources said. The Regulator will also be the appellate authority in cases of dispute. This will save the owners the hassle of running around to different authorities for redressal. The developers will also have to specify the common area in the society. The term "apartment" has been specified in the Bill and will include the space to be provided for a garage Key provisions of the Bill 1. Establishment of a Real Estate Regulatory Authority - Government has proposed to appoint a chairperson with two other members supporting him. The people who get appointed as part of the regulatory authority should have sufficient professional knowledge and experience in the field of public administration, urban development, finance, law or management. 2. Transparency and Powers of the Regulatory Authority - This authority is also going to maintain a website which will have the records of all real estate projects with all other details as provided in the application at the time of registration. 3. Registration with the Regulatory Authority - The builder is going to file all the details of his project with the regulatory authority and provide all necessary details of property dealers or middlemen dealing in the project. 4. Establishment of Appellate Tribunal - The bill will also provide for the establishment of a real estate appellate tribunal, which will decide upon any dispute and will hear appeals against any decision of the regulatory authority. 5. Obligations of a Promoter - This model bill has also outlined the role of the property developer and their duties towards the regulatory authority and also the property buyers. The developer is obligated to provide all documents and information for inspection to the prospective buyers. The builder enters into a written agreement with the buyer before taking any advance money. After the execution of the agreement, the builder will not be entitled to create a mortgage charge on the plot, building or apartment, without the prior written consent of the buyer. 6. Offences and Penalties - In order to make the proposed act effective, the Government will also penalize those who will not comply with its clauses. The penalties range from up to three years imprisonment for not registering a project or for not complying with the orders of the Appellate Tribunal to monetary penalties which may be ascertained on a daily basis for non compliance or as a percentage of the development costs or sale price. The Model Real Estate Bill seeks to bring clarity and consistency in the fast growing Indian real estate sector. The proposed Act will lead to better information sharing and decision making, between builders and the consumers. Further, by seeking to establish the Regulatory Authority and Appellate Tribunal, the Model Act provides for a forum where disputes could be heard by a specialized expert body, which would result in speedy dispensation of justice.
Posted on: Wed, 05 Jun 2013 05:31:50 +0000
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