Union Cabinet yesterday cleared the much awaited Real Estate (Regulation and Development) Bill, 2015. Real Estate Bill is a brainchild of UPA Government and was first presented in Rajya Sabha on August 14, 2013. The bill was than referred to the standing committee and further to the 21-member select committee to review the amendments proposed by the Government as well as by the private members. NDA Government has incorporated various amendments suggested committee and extended the scope of bill by integrating commercial projects into it. There are several favorable changes incorporated into the bill which would help the home buyers as well as boost domestic and foreign investment in the real estate sector which would help to achieve the Government ?Housing for All? plan.
Jump to Section
Real Estate Bill 2015 Features
1. Project Size
Real Estate Bill 2015 mandated residential projects measuring 500 sq meters or with 8 apartments to be registered with the regulatory authority. Earlier, the minimum limit was 1000 sq meters and 12 apartments which is now been reduced. This move aims to bring most of the projects under the real estate bill.
2. Residential and Commercial Projects
Commercial Projects are also included into the ambit of bill along with the residential projects. Earlier commercial projects were kept out of the bill but now for greater accountability and transparency commercial projects will also need to be registered with regulatory authority.
3. Structural Design and Defect
Price of the apartment should be based on the carpet area and developer should clearly mention the carpet area including kitchen and toilets and the terms like built-up area or super built-up area should not be used to delude consumers. Garage has been kept out of the apartment?s definition and developer needs to separately disclose the space for garage. Further, developers also need to take consent of two-thirds of the buyers in a project before making any changes to the plans and designs.[AdSense-A]
In addition, developers will now be held for any type of structural damages for 5 years against earlier proposed limit of 2 years. This will surely improve the quality of materials used in construction.
4. Time Limits
Fixing the time limits for regulatory authority as well as state authorities for making rules and regulations makes real estate bill 2015 more consumers friendly. Regulatory Authorities will now have to make regulations within 3 months of its formation against earlier proposed limit of 6 months. Similarly, states will now be required to form rules within 6 months of notification of the proposed act as against 1 year earlier proposed.
Further, home buyer will be required to take possession of house within 2 months of issuance of occupancy certificate and?formation of residents association is compulsory within 3 months of the allotment of a majority of units in a project.
5. Interest on Delays or Default
In case of delays or defaults by the developer, interest equivalent to interest paid by the buyer in case of defaults in installments will have to be paid by the developer also. For example, agreement states that buyer will be required to pay interest at 8% p.a. on defaults in payment of installments, now as per real estate bill 2015 if developer delays project than he is liable to pay equivalent interest to the home buyer. However, there may be certain exceptions for condonation of delays by developer.
6. Escrow Account
Major reason of delayed project is diversion of money by the developer in acquiring other lands for new projects. This major hindrance has been done away with by mandating developer to deposit atleast 70% of the project including cost of land into the separate escrow account. This provision will not only ensure the timely completion of project but also boost the confidence of the real estate investors.
Revised Real Estate Bill 2015 also proposes for arranging insurance of land title. This move will protect buyers as well as developers from frauds.
In case of dispute, appellate tribunals shall adjudicate case within 60 days of filing the case against to earlier proposed time limit of 90 days. The bill also proposes to setup adjudicating officers and Appellate Tribunal for fast-track dispute resolution.
In case of violations of the laws, developers could be imprisoned for 3 years or fined up to 10% of project cost or both while real estate agents and buyers may face imprisonment up to 1 year or 5% of apartment cost or both. Civil courts have been prohibited from taking cases related to real estate however, 644 consumer courts which are available at district level in the country may allow to hear grievances regarding real estate matters.
Real Estate Bill 2015 have been passed with good faith but there are some major areas of concern such as the bill does not bring under its ambit approving authorities which are in many cases, becomes the reasons for dallying projects. A projects needs various approvals such as intimation of disapproval (IOD), commencement certificate (CC), occupancy certificate (OC), building completion certificate (BCC) etc. and without prescribing the time limit in taking sanctions from approving authorities, the real estate bill 2015 may not fully serve its purpose.[AdSense-B]