Bill
to foster a happy alliance between consumers and developers, says Shri
M.Venkaiah Naidu
Notoriety
in real estate sector needs to be ended to encourage investment flows, says the
Minister
If
telecom sector with a few operators has a regulator, real estate sector with
over 76,000 companies needs one-Shri Naidu
Original
Bill of 2013 undergoes substantial changes for the better
Rajya
Sabha today approved the Real Estate (Regulation and Development) Bill,2016
that seeks to protect the interests of the large number of aspiring house
buyers while at the same time enhancing the credibility of construction
industry by promoting transparency, accountability and efficiency in execution
of projects. The Bill seeks to put in place an effective regulatory mechanism
for orderly growth of the sector which is the second largest employer after
agriculture.
Moving
the Bill pending in Rajya Sabha since 2013 for further consideration and
passing, Minister of Housing & Urban Poverty Alleviation Shri M. Venkaiah
Naidu stated that over the years the sector has acquired a degree of notoriety
which needs to be addressed to enable enhanced flow of investments, for which
the Government has announced several incentives in the Budget for 2016-17 and
earlier.
Shri
Naidu further said that consumer has become the king in telecom sectorfurther
to introduction of a regulator. While there are only a few operators in telecom
sector, a total of 76,044 companies are involved in real estate sector
including 17,431 in Delhi, 17,010 in West Bengal, 11,160 in Maharashtra, 7,136
in Uttar Pradesh, 3,054 in Rajasthan, 3,004 in Tamil Nadu, 2,261 in Karnataka,
2,211 in Telangana, 2,121 in Haryana, 1,956 in Madhya Pradesh, 1,270 in Kerala,
1,202 in Punjab and 1,006 in Odisha.
Stating
that real estate sector contributes about 9% GDP, the Minister informed the
House that between 2011 and 2015, new projects in the range of 2,349 to 4,488
were launched every year amounting to a total of 17,526 projects with
investment value of Rs.13.70 lakh cr in 27 cities including 15 state capitals.
According to industry information, about 10 lakh buyers invest every year to
own a house of their own.
Shri
Naidu asserted that with so many operators in the sector and such huge
investments at stake, regulating the real estate sector has become necessary in
the interest of consumers and developers. He said: “Consumer shall be the king
as in telecom sector and the developer obviously the queen. And there shall be
a happy marriage between the two for both to live happily ever after and the
Bill seeks to forge such a happy alliance for the benefit of real estate sector.”
The
Minister said that several rounds of consultations were held with consumer and
developer bodies, state governments and other stakeholders before and after
introduction of the Bill in Rajya Sabha in 2013 and as a result, the Bill has
undergone substantial changes benefitting the sector as a whole. Shri Naidu
outlined the improvements made in the Bill of 2016 as follows:
1.The
Government has gone beyond the recommendation of the Select Committee and now
requiring developers to deposit 70% of the collections form buyers in a
separate accounts towards the cost of construction including that of land as
against a minimum of 50% suggested by the Select Committee;
2.
Norms for registration of projects has been brought down to plot area of 500
sq.mts or 8 apartments as against 4,000 sq.mt proposed in the draft Bill in
2013 and 1,000 sq.mts or 12 apartments suggested by the Standing Committee;
3.
Commercial real estate also brought under the ambit of the Bill and projects
under construction are also required to be registered with the Regulatory
Authority. About 17,000 projects are reported to be at various stages of
development;
4.Capret
area has been clearly defined which forms the basis for purchase of houses,
eliminating any scope for any malpractices in transactions
5.Ending
the earlier asymmetry which was in favour of developers, both consumers and
developers will now have to pay same interest rate for any delays on their
part;
6.Liability
of developers for structural defects have been increased from 2 to 5 years and
they can’t change plans without the consent of two thirds of allottees;
7.The
Bill provides for arranging Insurance of Land title, currently not available in
the market which benefits both the consumers and developers if land titles are
later found to be defective;
8.Specific
and reduced time frames have been prescribed for disposal of complaints by the
Appellate Tribunals and Regulatory Authorities; and
9.A
provision is now made for imprisonment of up to 3 years for developers and up
to one year in case of real estate agents and consumers for any violation of
Tribunals and Regulatory Authorities.
The
Bill requires project promoters to register their projects with the Regulatory
Authorities disclosing project information including details of promoter,
project including schedule of implementation, lay out plan, land status, status
of approvals, agreements along with details of real estate agents, contractors,
architects, structural engineers etc. Shri Naidu said that this enables
transparent, accountable and timely execution of projects.
The
Minister further said that the Real Estate Bill,2016 enables the people meet
their genuine aspirations of owning a house including those of urban poor by
giving a fillip to affordable housing initiative under which the Government
intends to enable construction of 2 crore by the year 2022 under Prime
Minister’s Awas Yojana (Urban).
Chronology
of events leading to the passage of Real Estate Bill by Rajya Sabha:
-Ministry
of Law & Justice suggested a Central Law for regulation of real estate
sector in July, 2011;
-Union
Cabinet approved the Real Estate Bill, 2013 on June 4,2013;
-Bill
was introduced in Rajya Sabha on August 14, 2013;
-Bill
was referred to the Department Related Standing Committee on September 23,2013;
-Report
of the Standing Committee was tabled in Rajya Sabha on February 13 and in Lok
Sabha on February 17,2014;
-Attorney
General upheld validity of central legislation for real estate sector on
February 9,2015;
-Union
Cabinet approved Official Amendments based on the recommendations of the
Standing Committee on April 7,2015;
-Bill
of 2013 and Official Amendments referred to the Select Committee of Rajya Sabha
on May 6, 2015;
-Select
Committee tables its report along with the Bill of 2015 on July 30,2015;
-Real
Estate Bill, 2015 was approved by the Union Cabinet on December 9, 2015;
-Bill,2015
was listed for consideration and passing in Rajya Sabha on 22nd and
23rd December, 2015 but could not be taken up; and
-The
Real Estate (Regulation & Development) Bill, 2016 passed by Rajya Sabha on
March 10,2016.
AAR
March
10,2016