The Real Estate (Regulation and Development) Bill 2013 is up
for review during the monsoon session, two years since the draft was presented
to the Parliament. The chief beneficiary of the Bill will be the homebuyer who
has all along been at the short end of the receiving stick. The builder lobby,
understandly, is not pleased and that is putting it mildly.
Since presentation of the draft, the Bill’s several
provisions have been given a going over, in a bid to create professionalism in
the sectorand to get homebuyers a better deal by protectingtheirinterests. The
bill will also encourage investments in the Indian real estate according to
Cushman & Wakefield’s MD, Mr Sanjay Dutt.
The main objective is to set up a real estate regulatory
authority in each state, overseen by State governments. The bill provisions for
the carpet area to be the basis governing transactions and it also calls for
standardization of terminology to plug loopholes used by real estate builders to circumvent
policies and extract more from buyers.
The term promoter henceforth will also cover any individual or business
that buy in bulk with intent to resell. Real estate agents also fall within the
purview of the bill with registration being made mandatory as a way to check
for black money. The bill covers plot sizes of1000 sq.mtrs and above that will
have to be registered with the authority.
The most important provision, from the buyer’s viewpoint, is
that a builder is required to place 70% of the amount collected as advance in
escrow to be utilized only for construction in that specific project. Buyers
will also heave a sigh of relief that the provisions enjoin a builder to ask
for only 10% advance at booking with a sale agreement being compulsory and
cancellations cannot be unilateral. The proposed bill also has grievance
redressal mechanism and stiff penalties for defaulters. How States implement
the Bill will show whether it is a paper tiger or a real one with real teeth.
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