Real Estate Bill Passed in Rajya Sabha
Friday, March 11, 2016
- Developers will have to disclose layout plans and submit clearances with the regulator. They will also have to name the contractor, architect, structural engineer, etc. associated with the project. This will ensure transparency about property projects.
- Developers will need the consent of two-third buyers to alter plans, structural designs and specifications of the building. They will have the responsibility to rectify structural defects and refund money in cases of default.
- Sale of property on the basis of super area (area in which a flat is spread plus common area such as lobby) will be prohibited. Developers will have to advertise carpet area, which is the area enclosed within the walls of a flat, for sale.
- Each state will get a real estate regulator, which will settle disputes and impose compensation. All housing and commercial projects will have to be compulsorily registered with the regulator so that buyers can have access to genuine projects. Ongoing projects that have not received completion certificates will also be covered.
- Brokers, who intend to sell flats and plots in a project, will also have to get registered with the real estate regulator. They will be punished for non-compliance.
- Developers cannot advertise or launch projects without prior registration with the real estate authority.
- If rules are violated, projects will be de-registered and penalties will be imposed on the developer. Noncompliance will attract fine up to 10 per cent of project cost. Misinformation will attract fine of 5 per cent of project cost.
- Builders often demand part payment in cash, making many ordinary buyers party to corruption. The Bill will help curb undeclared “black money” in property markets that costs the government billions of rupees in lost taxable income.
- To ensure projects are completed on time, promoters will have to deposit 70 per cent of the amounts realized from buyers in a separate bank account within 15 days.
- Buyers can claim refund with interest and compensation if promoters fail to deliver projects in time.
- Regulatory authorities have 60 Days to dispose of complaints.
- Developer’s liability to repair structural defects in sold property has been increased to five years from an earlier two years. Promoters have also been barred from changing plans and design without the consent of consumers.
- In case of construction delays, promoters will have to pay consumers. if buyers default on payment, they will also be fined. the rate of interest in both cases will be the same.
- Even in case of delays, the Bill has sought to end the asymmetry which was in favour of developers. Now, both the consumer and developer will have to pay the same interest rate for any delay on their part.
- As a rule, promoters will be required to register projects with the regulatory authorities disclosing project information including details of promoter, project, schedule of implementation, layout plan, land status, status of approvals, agreements along with details of real estate agents, contractors, architects, structural engineers etc.
- Besides future projects, the bill will cover all ongoing projects where occupancy certificate has not been given.
- Allottees will have to cough up to 5% of the apartment cost, or spend a year in jail, or both, for defaulting on payment or other violations.