REVISED REAL ESTATE BILL 2016 CAN BOOST HOME BUYER’S CONFIDENCE AND WILL HELP TO THE BUYER WITH FASTER GRIEVANCE REDRESSAL
The recently passed Real Estate (Regulation & Development) Bill, 2016, in the Rajya Sabha and the Lok Sabha, is set to ease the home buying process. The bill has undergone several amendments and will be effective in bringing transparency and accountability in the real estate sector, thus increasing consumer confidence and benefiting the sector as a whole.
Rules for the builders
1. All commercial and residential real estate projects with land over 500 square metres, or having 8 apartments, must be registered with RERA.
2. Builders must maintain 70% of the amount collected for the project in a separate escrow account and use it ONLY for the construction of the said project. However, individual state governments can alter this amount to less than 70% in their particular state. Escrow is a temporary account held by a 3 party during transaction between 2 parties.
3. Builders need to specify a timeframe of the project, or else they have to pay penalties.
4. It stops promoters from changing plans and design without consent of two thirds of the consumers.
5. The Bill defines carpet area of a property as ‘net usable floor area’, excluding the area covered by its external walls,under shafts, balconies and terraces.
6. Builders to be responsible for fixing structural defects for 5 years after transferring the property to a buyer
The bill seeks to establish fast track dispute resolution mechanisms through adjudicating officers and Appellate Tribunal. It bars civil courts from taking up real estate matters. However, consumer courts are allowed to hear such matters.
Allow RERAs to direct state govt. to establish a single window system for providing clearances for projects. A time limit should be specified for state and local authorities to issue completion certificates.
1. This law ensures that any delay in project completion will make the developer liable to pay the same interest as the EMI being paid by the consumer to the bank back to the consumer.
2. If promoter does not register his property then they have to pay penalty up to 10% of the project cost.
3. The maximum jail term for a developer who violates the order of the appellate tribunal of the RERA is three years with fine of 10% of the estimated project cost or without a fine.
4. If promoter provides false information then they will pay penalty up to 5% of the estimated project cost.
5. If promoter violates any other provision of the act then they have pay penalty up to 5% of the estimated project cost.
6. There is provision of fine for the agents is INR 10,000 per day during the period of violation of provisions of the act.
Impact of the bill on the Real Estate Industry
1. Ensures efficiency and transparency in all property related transactions.
2. Improves accountability of the developers and protects consumer interest.
3. Promotes fairplayand timely execution of the projects.
4. Helps in differentiating a good developer from a bad one.
5. Single window clearance will aid faster execution of the.
6. Boosts positive sentiments among the buyers and will in turn bring more FDI.
7. Timely completion will result in increase in supply of homes and help bring down prices.
8. Overall boost to the economy as housing sector has many backward and forward linkageswith other industries.
9. Creation of more employment opportunities.
10. It will help achieve government’s ambitious plan of ‘Housing for All by 2020’.
11. It will help curb black money as real estate sector constitutes about 11% of GDP and is particularly vulnerable to black
12. Money through underreporting of transaction prices while paying taxes.
The real estate bill is anticipated to bring on a stimulating modification in how various stakeholders revamp their structural capabilities and boost investors’ confidence in the realty sector. However, it’ll take time before the real estate regulator becomes a reality, as states have to be compelled to follow up once it gets presidential assent.
Dinesh Kumar Chaurasia