Dipak Kumar Dash | TNN | Dec 10, 2015, 02.58 AM IST | Times of India
Cabinet clears 20 major amendments to real estate bill
NEW DELHI: The government on Wednesday approved 20 changes in the Real Estate (Regulation and Development) Bill including a proposal for insurance of land title to protect buyers and developers from the risk of land fraud, a move which is seen to be pro-consumer.
The legislation comes after a wait of nearly three years and is expected to help regulate the unorganized sector, plug loopholes and protect buyers by setting up regulators in each state.
It has proposed a jail term up to three years or penalty or both in case of builders, one year for real estate agents and buyers for violating the orders of appellate tribunals. Another major change which is expected to benefit consumers is the condition of keeping 70% of the sale proceeds for a particular project in a separate account to meet the construction cost of that project, including the land cost. This has been done to minimize diversion of funds and ensure timely completion of projects.
Moreover, the regulatory authorities can grade projects along with grading of promoters to help buyers make the choice while booking a property.
In order to make states comply with the norms, the bill says states will have to make the rules within six months of notification of the proposed Act. Each state will establish the real estate regulator and the appellate tribunal as per the rules. The tribunal will be the final arbiter in case of disputes between a buyer and builders or promoters. Either party can approach the tribunal if the dispute is not settled by the real estate regulator.
“The provision for arranging insurance of land title will bring greater confidence in buyers and builders as well since they will get back their entire investment from the insurance company in case the title is held invalid. Such instances have happened in some cases recently,” said a housing ministry official. The bill aims to protect interest of at least 10 lakh buyers annually and promoting investments in the real estate sector.
The Cabinet approved the bill after government held rounds of meetings with all stakeholders and incorporated recommendations of the parliamentary panels. It is keen to table the bill in Parliament during the ongoing session since there is little protection for consumers in the present framework.
It also provisions that the consumer has the option to approach consumer forums at district level instead of only the regulatory authorities proposed to be set up under the bill for redressal of grievances.
Moreover, to ensure that the regulatory authorities don’t delay the cases, the bill has a provision for disposing off complaints in 60 days while no such time limit was indicated in the earlier bill. Similarly, the appellate tribunals need to adjudicate cases in 60 days as against 90 days as proposed earlier.
Some of the other key provisions of the revised bill include mandatory registration of projects of 500 sq metre area or eight flats with regulator instead of 1,000 sq metre or 12 flats as proposed earlier.
The bill has also incorporated the mandatory provision for formation of allottees associations such as RWAs within three months of allotment of majority of units so that buyers get to manage community facilities like common hall, club house and reading room.
According to the changes, the liability of promoters for structural defects has also been increased to five years from the earlier provision of two years.
Moreover, to fast-track the projects, the proposed bill has included the section for promoting single window system of clearances for real estate projects by the regulatory authorities. It also says that the allottees shall take possession of houses in two months of issuance of occupancy certificate.
The bill is also need to include quality check to avoid early dilapidation and collapse of the building causing life risk.
In order to ensure that chairmen and members of regulatory authorities and appellate tribunals do an honest job, the bill proposes barring them from taking up post-retirement jobs except in government and statutory bodies.
According to estimates 10 lakh consumers buy houses every year with an investment of about Rs 3.50 lakh crore in residential segment. About 3,200 to 4,000 new projects are launched every year. At present about 17,000 real estate projects are in progress in 26 major urban agglomerations in the country, which also will come under the ambit of the proposed bill.
Source : http://goo.gl/9HCfCx