The Union Cabinet presided over by the Prime Minister Narendra Modi today approved amendments to the Real Estate (Regulation and Development) Bill, 2013 pending in the Rajya Sabha, making way for creation of a uniform regulatory mechanism across the country with the objective of protecting the interests of millions of consumers while at the same time enhancing the growth of construction sector through enhanced credibility. The Bill seeks to ensure accountability and transparency which will in turn enable the real estate sector to access capital and financial markets essential for its long term growth.
Through the amendments to the Bill of 2013, the Cabinet has extended the applicability of the Bill to commercial real estate also. Ongoing projects that have not received Completion Certificates have also been brought under the purview of the Bill and such projects will need to be registered with the Regulator within 3 months. Another major modification being that promoters will not be allowed to change plans and structural designs without the consent of 2/3rd of consumers of a project. Real estate agents also have been made punishable for non-compliance of the orders of Regulatory Authority and Appellate Tribunals to be set under the proposed law.
Under the other new stipulations approved by the Cabinet, States have to make rules within one year, rank of adjudicating officer has been elevated to that of District Judge, web based online system for submitting applications for registration of projects to be introduced within one year of the establishment of Regulatory Authorities and Regulator has to decide cases within 60 days. Under the Bill moved by the Ministry of Housing and Urban Poverty Alleviation, real estate project developers both in residential and commercial sectors will be required to register their projects with the Regulatory Authorities to be set up. Promoters will be mandatorily required to disclose all information regarding the promoters, project, layout plan, schedule of development works, land status, status of statutory approvals, proforma agreements, names and addresses of real estate agents, contractors, architect, structural engineer etc.
Promoters will be required to compulsorily deposit 50% of the amounts collected from consumers in a separate account in a scheduled bank with in a period of fifteen days to cover the cost of construction. This provision of 50% has been made after taking into account the cost of land needed to be acquired before announcing a project.
Penal provisions under the proposed law include payment of 10% of project cost for non-registration and payment of another 10% of project cost or 3 year imprisonment or both if still not complied with. For wrong disclosure of information or for not complying with the disclosures and requirements, payment of 5% of project cost will be imposed. Regulatory Authorities will also have the power of cancellation of registration in case of persistent violations and decide on the further course of action regarding completion of such projects.Under the proposed Law, one or more Regulatory Authorities will be set up in each State/UT or one Authority for two or more States/UT by the concerned Governments for oversight of real estate transactions. These Regulators will co-ordinate efforts regarding development of the real estate sector and necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector. For fast track dispute settlement, one or more adjudicating officers will be appointed to settle disputes and impose compensation and interest. Appeals against adjudicating officer and Regulatory Authority will lie with the Appellate Tribunals to be set up and final appeals will lie only with High Courts.
The Real Estate Bill has incorporated several suggestions and views of the Standing Committee of Parliament on Urban Development, Ministry of Consumer Affairs, Ministry of Finance, Department of Legal Affairs, consumer and industry associations. Efforts have been on since 2009 for creating a regulatory mechanism for the real estate sector on the lines of other regulatory bodies. On becoming an Act, the Real Estate (Regulation and Development) Legislation is expected to give a boost to the ‘Housing for All by 2022’ mission by enabling increased flow of investments through enhanced transparency, accountability and standardization.