NEW DELHI | MUMBAI: The Cabinet has approved 20 major
amendments to the real estate regulatory Bill that seeks to protect home buyers
as well as help boost investments in the real estate industry.
These changes are based on the recommendations
of a Rajya Sabha committee that
examined the Bill pending in the upper house of Parliament.
Under the amendments, projects on at least 500
sq metres of area or with eight flats will have to be registered with the
proposed regulatory instead of the minimum size of 1,000 sq metres suggested
earlier, bringing a larger number of projects under the regulator's ambit.
Builders will have to deposit at least 70% of
the sale proceeds, including land cost, in an escrow account to meet construction
cost, compared with the earlier proposal for 50% or less, and pay interest to
home buyers for any default or delays at the same rate they charge them.
Builders will be liable for structural defects for five years, instead of two
years earlier.
Carpet area has been clearly defined under the new proposals
to include usable spaces like kitchen and toilets. Garage will be kept out of
the purview of definition of apartment. Formation of residents' association is
compulsory within three months of the allotment of a majority of units in a
project.
The Bill seeks to allow aggrieved buyers to
approach consumer courts at the district level, instead of only the real estate
regulatory authorities proposed to be set up under the Bill. The regulatory
bodies will mostly come up in state capitals.
The government had made a few changes to the
Bill earlier in December 2014. It had brought commercial real estate projects
under the ambit of the Bill, made the provisions of the Bill applicable to all
projects wherein sales are still in progress and put in place a system that
would require consent of twothirds of the buyers in a project for changing
project plans.
Getamber
Anand, national president of the Confederation of Real Estate Developers'
Associations of India (CREDAI), said while builders welcome the changes, the
Bill should not be retrospective in nature as it would lead to a lot of
confusion and delays. Commercial real estate should be kept out of the ambit of
the regulator, he said.
"Also,
they still have not included sanctioning authorities in the Bill. So where do
we go if there is a delay in getting approvals such as plinth certificates,
occupancy certificate, electricity and water connections, even after the
project has taken off. Without these permissions, even a completed project
cannot be offered for possession to home buyers," Anand said. These
issues, he said, should be addressed so that they do not become a pain point
for the industry.
Anuj
Puri, chairman and country head at property consultancy JLL India, said the
Bill will bring more transparency and accountability into the sector, which
will in turn help reduce the cost of capital. This will be good for both
developers and buyers, Puri said.
"However, it needs to be ensured that it (the proposed
regulator) does not become one more approval authority as we already have
several of them," he said. "To begin with, we could have started with
large projects and then brought smaller ones under its ambit, as it will be too
much of volume to handle at a time when we are starting with it." The
revised Bill includes an enabling provision for arranging insurance of land
title, which is currently not available. This will benefit buyers and sellers
in situations where the title of the land is held invalid.
The regulatory authorities will promote a single-window
system of clearances for real estate projects. This will likely speed up
construction work that now lags because of delays in getting permissions.
Regulatory authorities can grade projects along
with grading of promoters, besides ensuring digitisation of land records. They
will be required to make regulations within three months of the formation of
the regulator as against six months proposed earlier.
States will have to make rules within six months
of notification of the proposed Act as against the one year proposed earlier.
Allottees shall take possession of houses in two months of issuance of
occupancy certificate.
Under the new proposals, additional benches of
appellate tribunals can be set up in a state if required for speedy
adjudication of grievances.
A new provision has been created for
imprisonment of up to three years in case of promoters and up to one year in
case of real estate agents and buyers for violation of orders of the appellate
tribunals or monetary penalties, or both.
Under the proposals, tribunals will have to
adjudicate cases in 60 days as against 90 days proposed earlier. Regulatory
authorities will have to dispose of complaints within 60 days. No such time
limit was indicated earlier.
