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1) As of now the real estate sector was largely unregulated in India. If a consumer had a complaint against a developer he would had to make rounds of consumer or civil courts. Also absence of standardization and lack of adequate consumer protection has constrained the healthy and orderly growth of the industry. Not anymore. Once the bill becomes an Act, in case of any grievance, the consumer can go to the real estate regulator for redressal.
2) The bill will make it mandatory for all commercial and residential real estate projects where the land is over 500 sq. mt. or eight apartments will have to register with the regulator before launching a project. By making registration of the project compulsory with the regulatory authority, the bill aims to provide greater transparency in project marketing and execution. Failure to do so will attract a penalty which may be up to 10% of the project cost and a repeat offence could land the developer in jail.
3) Developer will have to put 50% of the money collected from a buyer in a separate account to meet the construction cost of the project. States can increase the ceiling but not lower it. This will put a check to the general practice by majority of the developers to divert buyer’s money to start new project instead of finishing the one for which money was collected. This will ensure that construction is completed on time.
4) It is likely to stabilize housing prices. The bill will lead to enhanced activity in the sector, leading to more housing units supplied to the market. In the government’s opinion, the bill will bring in the much-needed confidence to infuse more investment and, in turn, stabilise house prices.
5) The bill also seeks to impose strict regulations on the promoter and ensure that construction is completed on time. Its purpose is to ensure that the buyer gets the property as per the specifications that he had been promised
6) Carpet area has been clearly defined in the bill to include usable spaces like kitchen and toilets imparting clarity which was not the case earlier.
7) Developer’s liability to repair structural defects has been increased to 5 years from the earlier 2 years.
8) Real estate appellate tribunals now required to adjudicate cases in 60 days as against 90 days in the earlier proposal.
9) Regulatory Authorities to dispose of complaints in 60 days while no such time limit was indicated earlier.
How it benefits builders:
The builders will also benefit from the proposed legislation, as it proposes to impose penalty on allottee for not paying dues on time. Also the builder will have the opportunity to approach the regulator in case there is any issue with the buyer.
But, builders believe that the bill was heavily stacked against them. The bill provides for penalty, upto 10 per cent of the total project cost or even imprisonment, if builders do not honour their commitment or fail to register themselves with the regulator.