The
Real Estate (Regulation and Development) Bill, 2013, as approved by the Union
Cabinet in its meeting on 4th June 2013, was introduced in the Rajya Sabha today
. The Bill has been piloted by Dr. (Ms) Girija
Vyas, Minister of Housing and Urban Poverty Alleviation . Soon after its introduction, the Bill was
referred to the Parliamentary Standing Committee on Urban Development for
review and making suggestions.
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 and has been much awaited by all aspiring home buyers.
The
Real Estate (Regulation and Development) Bill, 2013 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 has been prepared by the Government after extensive consultations with
States, experts and stakeholders. The Bill has been supported by the States
along with Ministry of Consumer Affairs, the Competition Commission and Tariff
Commission among others.
The
Bill is being proposed under Entries 6, 7 and 46 of the Concurrent List of the
Constitution of India, which deals with Transfer of Property, Registration of
Deeds and Documents, and Contracts.
It
contains elaborate provisions to bring in the much needed transparency in real
estate dealings through provisions for registration of real estate projects and
real estate agents with the Real Estate Regulatory Authority; functions and
duties of promoters and agents; rights and duties of allottees
etc., The Bill once enacted will lead to
establishment of Real Estate Regulatory Authority and Real Estate Appellate Tribunal in every State for registration of all real
estate projects and for speedier dispute resolution. Stringent penalties have been sought to be
imposed on habitual offenders. This it is believed will act as a deterrent for
those few erring builders who bring bad name to the developer community at
large.
Currently,
the real estate and housing sector is largely unregulated and opaque, with
consumers often unable to procure complete information, or enforce
accountability against builders and developers in the absence of effective
regulation. The Bill is expected to ensure greater accountability towards
consumers, and to significantly reduce frauds and delays. 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 which in turn will enable the sector to access capital and
financial markets essential for its long term growth.
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.
Benefits and Advantages of Real Estate Bill, 2013
·
The Bill will bring about
standardization in the sector
leading to healthy and orderly growth of the industry through introduction of definitions such as
‘apartment’, ‘common areas’, ‘carpet area’, ‘advertisement’, ‘real estate
project’, ‘prospectus’ etc. Introduction of the concept of using only
‘carpet area’ for sale which has till now been ambiguously sold as super area,
super built up area etc., will curb unfair trade practices.
· The Bill like other sectors such as telecom, electricity, banking, securities,
insurance etc. provides for specialized regulation and enforcement which
includes both curative and preventive measures, with powers to enforce specific
performance, not available under the consumer laws. The Authority has powers to
give directions for specific performance powers to impose penalty for
non-registration of projects including imprisonment for continuous violation upto 3 yrs and impose penalty in case of other
contraventions.
· The Bill proposes to register real estate agents which have
hitherto been un-regulated, with clear responsibilities and functions, thereby
leading to money trail and curbing money
laundering.
· The Bill aims to ensure consumer protection, by making
it mandatory for promoters to register all projects, prior to sale; and only after
having received all approvals from development/municipal authorities thereby
protecting buyer investments.
· The Bill will promote transparency and fair and ethical
business practices, relating to transactions, through disclosure of project
details and contractual obligations vis-à-vis the project and the buyer, promoting informed
choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions.
· The Bill seeks to establish a regulatory oversight mechanism,
through Real Estate Authority(s) and Appellate Tribunal in the States, to
enforce accountability norms for the promoter buyer and the real estate agents.
· The Bill will infuse professionalism and promote planned
development of the real estate sector through the promotional role of the Regulatory Authority.
· The Bill will ensure timely completion of projects, and prevent
fund diversion.
· The Bill provides for a speedy and specialized adjudication
mechanism to settle disputes between the promoter, buyer and real estate
agents, thereby de-clogging the civil courts and consumer forums, from disputes
in the real estate sector.
· The Bill
will catalyze domestic and foreign
investment into the sector, thereby contributing to enhanced activity, and
increase in GDP growth.
The salient features of the draft Bill are as
under:
§
Applicability of the Bill:
The proposed Bill applies
to residential real estate i.e. housing and any other independent use ancillary
to housing. However it shall not apply where the area of land proposed to be
developed does not exceed 1000 square meters or the number of apartments
proposed to be developed does not exceed 12, inclusive of all phases, or an
area or number of apartments as notified by the Central Government on
recommendations from the appropriate Government, which may be different for
different States or Union territories but not more than 1000 square meters or 12
apartments.
§
Important Definitions:
The Bill will bring about
standardization in the sector leading to healthy and orderly growth of the
industry through introduction of definitions such as ‘apartment’, ‘common
areas’, ‘carpet area’, ‘advertisement’, ‘real estate project’, ‘prospectus’
etc. Introduction of the concept of using only ‘carpet area’ for sale, which
has till now been ambiguously sold as super area, super built up area etc.,
will curb unfair trade practices.
§
Establishment of Real Estate Regulatory Authority:
Establishment of one or
more ‘Real Estate Regulatory Authority’ in each State/UT, or one Authority for
two or more States/UT, by the Appropriate Government, with specified functions,
powers, and responsibilities to exercise oversight of real estate transactions,
to appoint adjudicating officers to settle disputes between parties, and to
impose penalty and interest;
§
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 immovable
property, with the Real Estate Regulatory Authority on real time basis without
adding another layer of approvals.
§
Mandatory Public Disclosure of all project details:
Mandatory public disclosure
norms for all registered projects, including details of the promoters, project,
layout plan, plan of development works, land status, carpet area and number of
the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate
agents, contractors, architect, structural engineer etc.;
§
Functions and Duties of Promoter:
Duty of promoters towards
disclosure of all relevant information and adherence to approved plans and
project specifications, obligations regarding veracity of the advertisement for
sale or prospectus, responsibility to rectify structural defects, and to refund
moneys in cases of default;
§ Compulsory deposit of
seventy percent or such lesser percent as notified by the Appropriate
Government, to cover the construction cost of the project, of funds received by
the Promoter, in a separate bank account:
§
Functions of Real Estate Agents:
Real estate agents not to
facilitate the sale of immovable property which are not registered with the
Authority required under the provisions of the Act, obligation to keep,
maintain and preserve books of accounts, records and documents, obligation to
not involve in any unfair trade practices, obligation to facilitate the
possession of documents to allottees as entitled at
the time of booking, and to comply with such other functions as specified by
Rules made in that regard;
§
Rights and Duties of Allottees:
Right to obtain information
relating to the property booked, to know stage-wise time schedule of project
completion, claim possession of the apartment or plot or building as per
promoter declaration, refund with interest in case of default by the promoter,
and after possession entitled to necessary documents and plans. Duty of allottees to make necessary payments and carry out other
responsibilities as per the agreement;
§
Promotional role 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;
§
Fast Track Dispute Settlement Mechanism:
Establishment of fast track
dispute resolution mechanisms for settlement of disputes, through adjudicating
officers (an officer not below the rank of Joint Secretary to the State
Government) to be appointed by the Authority, and establishment of an Appellate
Tribunal to hear appeals from the orders of the Authority and the adjudicating
officer;
§
Establishment of Central Advisory Council:
Establishment of Central
Advisory Council to advise the Central Government on matters concerning
implementation of the Act, with a mandate to make recommendations on major
questions of policy, protection of consumer interest and to foster growth and
development of the real estate sector. The Council to have among others, five
representatives of State Governments, to be selected by rotation;
§
Establishment of Real Estate Appellate Tribunal:
Establishment of Real
Estate Appellate Tribunal, by the State Government to hear appeals from the
orders or decisions or directions 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;
§
Punitive Provisions:
Punitive provisions for non
registration of a real estate housing project - Penalty which may extend up to 10% of the
estimated cost of the real estate project as determined by the Authority .
For continued violation or
non-compliance of order for registration
- punishment
with imprisonment for a term which may extend up to three years or with fine
which may extend to a further 10% of the estimated cost of the real estate project,
or with both as determined by the Authority .
For knowingly providing
false information or willful contravention at the time of applying for
registration and for other
contraventions under the law – A penalty which may extend up to 5% of the estimated
cost of the real estate project as determined by the Authority.
RM/RS