The salient features of the Draft Real Estate (Regulation & Development) Bill are
- Establishment of a ‘Real Estate Regulatory Authority’ in each State by the Appropriate Government (Centre for the UTs and State Governments in the case of the States), with specified functions, powers, and responsibilities to facilitate the orderly and planned growth of the sector;
- Mandatory registration of developers / builders, who intend to sell any immovable property, with the Real Estate Regulatory Authority as a system of accreditation;
- Mandatory public disclosure norms for all registered developers, including details of developer, project, land status , statutory approvals and contractual obligations;
- Obligations of promoters to adhere to approved plans and project specifications, and to refund moneys in cases of default;
- Obligation of allottee to make necessary payments and other charges agreed to under the agreement and payment of interest in case of any delay;
- Provision to compulsorily deposit a portion of funds received from the allottees in a separate bank account, to be used for that real estate project only;
- The Authority to act as the nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector; as also establish dispute resolution mechanisms for settling disputes between promoters and allottees/ buyers;
- Authorities to comprise of one Chairperson and not less than two members having adequate knowledge and experience of the sector;
- Establishment of a ‘Real Estate Appellate Tribunal’ by the Central Government to hear appeals from the orders of the Authority and to adjudicate on disputes. Tribunal to be headed by a sitting or retired Judge of Supreme Court or Chief Justice of High Court with 4 judicial and at-least 4 administrative/technical members;
- Chairperson of the Tribunal to have powers to constitute Benches, for exercising powers of the Tribunal;
- Establishment of a Central Advisory Council to advise the Central Government on matters concerning implementation of the Act.
- Council to make recommendations on major questions of policy, protection of consumer interest and to foster growth and development of the real estate sector;
- Penal provisions to ensure compliance with orders of the Authority and Tribunal;
- Jurisdiction of Civil Courts barred on matters which the Authority or the Tribunal is empowered to determine;
- Both Centre and States to have powers to make rules over subjects specified in the Bill, and the Regulatory Authority to have powers to make regulations;
- Powers to Central Government to issue directions to States on matters specified in the Act have also been specified.
Source: Ministry of Housing and Urban Poverty Alleviation webiste: http://mhupa.gov.in/index.htm)
News as published in ET (Source: http://economictimes.indiatimes.com/markets/real-estate/policy-/-draft-real-estate-regulation-bill-to-bring-in-transparency-in-land-selling/articleshow/10700405.cms ) Builders will have to register themselves before launching housing projects, stick to the approved plans and refund money to homebuyers in case they default, after the government brings in a new law aimed at bringing in more accountability and transparency in land and home transactions. The Real Estate (Regulation and Development) Bill, 2011, which is expected to be tabled in Parliament during the upcoming winter session, will also pave the way for the setting up of the Real Estate Regulatory Authority, an industry watchdog that will keep a lease on land sharks and fly-by-night operators. Union minister for housing and urban poverty alleviation, Kumari Selja, on Friday unveiled a new draft bill for public consultation. The draft has also recommended that builders set up a separate escrow account to compulsorily deposit 70% of the funds received from buyers and to ensure that these funds are used for that real estate project only. An earlier draft had proposed that the developers would submit bank guarantees. The draft has also said that the promoters will be obliged to stick to the approved plans and project specifications and provide all information to the buyers who have booked apartments, which includes site plans along with structural designs and specifications. The builders, who intend to sell any immovable property, will have to register with the Real Estate Regulatory Authority for accreditation, except for when the area of the land being developed does not exceed 4,000 sq mt. But the developer will have to make an application to the authority disclosing details about the project, including land status, approvals and contractual obligations for the registration process. No builder will be allowed to issue or publish an advertisement or prospectus or start booking of flats in a project without obtaining registration from the authority. The builders will also have to refund moneys in cases of default. "If the developer willfully fails to comply with the norms they shall be punishable with imprisonment for a term of up to three years or a penalty which may extend to a tenth of the estimated cost of the real estate project, or both," the bill says. Builders have been up in arms against the imprisonment clause and have said it can be misused and heavy financial penalty is more than enough. "The bill aims at restoring confidence of the general public in the real estate sector and ensure transparency, disclosure and accountability in the real estate sector," said Selja. She said that the bill proposes to strike a balance between encouraging regulated growth and development as well bringing in more accountability in the sector. The draft has proposed the formation of a nodal agency called the Real Estate Regulatory Authority in each state to co-ordinate efforts regarding development of the real estate sector and offer necessary advice to the state governments and centre for a "transparent, efficient and competitive real estate sector." The authority will also establish dispute resolution mechanisms for settling disputes between developers and buyers. Getamber Anand, vice president of CREDAI - a builders' association -and managing director of ATS Group said, "This could lead to unauthorised developments in plots of less than acres especially in the smaller cities and town where unauthorised colonies are built on smaller plots." The draft has recommended that the buyer will also be obliged to make necessary payments and other charges as agreed to under the agreement and payment of interest in case of any delay
References:
Final Press Brief for 10_11_2011
By: Munikrishna Boga
Is this bill passed?
If anybody has updates on this , please provide!
Cabinet approved the Real Estate Bill today. Key points of the bill include
1. Imprisonment for misleading advertisements
2. Mandatory launch of projects only after all approvals/clearances have been received
3. Sale price based on carpet area
4. Refunds in case of delays
Lately a good news but we will have to wait and see how is union government planning to execute these regulations in the market place. Also wondering what will happen to current prelaunch projects such as skylark itharca, prestige sunrise park etc! Can still these builders go ahead and invite EOIs or should they stop these with immediate effect.
Its a great victory for the people of india.. The CCI has pronounced the one sided agreement by DLF.
Everyone please share or fwd this to your friends. This is a landmark judjement and all developers should follow the same moving forward.
http://www.cci.gov.in/May2011/OrderOfCommission/192010S.pdf
Yes Priya, this is a good judgment given the nature of allegations leveled against DLF. But government should play more proactive role in standardizing real estate agreement clauses and other terms & conditions executed between builder and buyer. As we all know the sale and construction agreement is always biased towards the builder (- one sided agreement); since there is no other option for us builders are exploiting our helplessness!! But this is the responsibility of government who are apathetic towards common man’s problems! Also buyers cannot fight legally with every other builder since this is a tedious and time consuming task sometimes may take 5-10 years but these kinds of verdicts would bring some cheers in the realty market! But there is long way to go for Indian Real Estate as far as consumers’ interests are concerned!! – Muni
Real Estate regulator is highly required. The bill was planned for winter session but I think since FDI hogged the lime light and nothing else could happen. The next is Budget session which will be busy with Budget and Delhi rape case and measures to counter it (which I think are really more Imp than Real Estate regulator) and even Telanga issue (govt. yesterday announced T issue again)
It seems like “Real Estate regulator” can be presented earliest in Monsoon session. But it will be a game changer.
Agree, it will be a game changer if the bill is in favor of people/buyers like us instead of builders who are indulging in daylight robbery!!
i also hope for its quick implementation. Rightly said mass middle class has great interest in this sector and is the least organised. i did not understand line which states that will lead to unauthorised development in smaller cities and town with < acre's development
Senior RE experts can throw more light on this topic?
The Indian Real Estate Regulatory bill has been due for a long time and finally it seems to be gaining some momentum as the Ministry of Housing released the draft version for public/experts comments. The credibility of the bill remains an unanswered question as CREDAI, the real estate industry representative body, has been playing an influential role in this entire decision making process!! Nevertheless, none of the industry/service regulator has become all powerful from day one! Though the money/funds involved in real sector are of enormous nature but protecting a buyer/investor interests is never been part of any government’s agenda! The growing middle class represents majority of the Indian population so it’s high time for the government to act and implement stringent legal and compliance norms to safeguard the interests of all home buyers.
Indian real estate is the most disorganized (service) sector that currently existing in India, so any remedial actions with immediate effect will be most sought after by all stakeholders, specifically these initiatives will cheer the home buyers! Hope Government will take proactive steps in curbing the malpractices that prevailing in Indian Real Estate sector and would bring a transparent, healthy and vibrant RE environment.
Regards,
Muni