The Real Estate Bill, which aims at protecting home buyers from developers who fail to deliver on time, has been passed by both the Houses of Parliament.
The Bill will now be sent for the President’s approval, after which it will become law.
The government had fast-tracked the proposal based on the renewed interest shown by the Congress, the main opposition party, in getting the Real Estate (Regulation and Development) Bill cleared in Parliament.
The Real Estate (Regulation and Development) Bill, 2013, approved by Lok Sabha, five days after its passage by the Rajya Sabha, is designed to protect consumer interest, ensure efficiency in all property-related transactions, improve accountability of developers, boost transparency and attract more investments to the sector, the government said.
It provides for setting up of a Real Estate Regulatory Authorities (RERAs) which will ensure timely execution of projects.
The real estate authorities will regulate transactions related to both residential and commercial projects and ensure their timely completion and handover.
“The Real Estate bill is going to be a game changer for the real estate sector. With ‘transparency’ and ‘protection of consumer interests’ as the primary objectives, the Bill seeks to address typical problems including construction delays and unapproved constructions. Under the new law, developers can commence promotion or marketing of projects only after registering the projects with the Real Estate Regulator. Also, they are mandated to deposit 70 percent of the funds received from consumers into an escrow account,” says Kalpesh Maroo, Partner, BMR & Associates LLP.
Further highlighting the new bill, Kamlpesh commented, “The new law would be applicable to all projects which are being developed on plots of 500 square feet or more or project which have more than 8 units. All projects which have not received the occupation or completion certificate as on the date on notification of the law would come under the ambit of the new law. Though the Act is expected to be notified shortly, for the provisions to take effect, the state government would need to appoint the authority to be called the Real Estate Regulatory Authority (RERA). There is a time limit of one year for appointing the RERA. Hence, the impact of the new law will not be seen till the respective RERAs are appointed.”
“While there is no denying the need to ensure fairness and transparency in real estate transactions from a consumer perspective, the bill in general is quite prescriptive and onerous in its requirements and entails higher compliances, higher interest costs, detailed penalties and prosecution for promoters. Hence, on balance, the bill has tended to over correct and over regulate.”