By: Ravi Sinha
Track2Realty Exclusive
The much talked about and widely anticipated Real Estate Regulation and Development Bill may not get cleared in the current Budget Session of Parliament, since the government is getting cold in the wake of the Union Government running into opposition from the states on a host of issues, including the proposed National Counter Terrorism Centre and Lokpal Bill.
The Centre has reportedly decided to go slow on the bill to regulate India’s burgeoning real estate sector. The strategy now is to introduce the Bill in the later part of the Budget Session so that if there is protest across the board in the House, it could be passed on to the next session of the house.
The housing and urban poverty alleviation ministry, which had finalised the draft Real Estate Regulatory Authority Bill, had earlier set March 31 as the deadline to get the proposed legislation approved by the cabinet. The Bill in its current form has been pending since 2009.
As a matter of fact, for the last six years, the UPA government has been trying to introduce this bill and form a real estate regulator for the country.
Under the first term of the UPA, the proposal was to have a regulator Bill which would be just a model Act for the city of Delhi because land and real estate are normally state subjects.
However, the law ministry has now given an opinion quite recently saying that as long as agricultural land is not involved, real estate could be a part of the concurrent list. This statement is significant as it would entail central legislation for all of India and all states will have to set up a regulator.
Some of the important provisions which sounds cheer to consumers include the mandate that developers will have to keep aside 70% of the funds received from buyers in a separate bank account to ensure that the projects are completed on time.
Another provision that will impact developers is the mandatory registration of every project which has more than 12 apartments with the state real estate regulatory authority. Developers cannot prelaunch, advertise or offer to sell any apartment, project or plot of land unless the registration is complete.
The authority will have to decide within 50 days of application for registration after all the requisite documents such as structural and architectural plans, and government approvals, are submitted.
In case there is a delay in the project, consumers can demand a full refund with interest. The authority will also be vested with the powers to prescribe a penalty on the developer in case of a project delay.
Finally, the developer cannot ask for an advance of more than 10% from a buyer unless there is a written agreement signed with the buyer.
The Centre had earlier proposed a model Real Estate Regulatory Authority Bill. Last year, it decided that it should be redrafted into a central act. “Though land and colonisation are state subjects, the ministry decided to redraft the bill under the concurrent list as some of the issues being covered fall under concurrent jurisdiction,” said an official.
Now, apprehensive that the state governments may oppose the setting up of a regulator, it has decided to hold another round of consultations to get them on-board.
