The Real Estate (Regulation and Development)
Bill, which the government plans to bring to Parliament in the budget session,
has been framed under provisions dealing with property transactions in the
concurrent list of the Constitution that applies to states, making the proposed
legislation more than a model law.
Carpet Area Vs Super Area..!
Highlights of Real Estate Bill..!
** The new law to give house buyers a better
deal aims to ensure builders / promoters sell residential property on the basis
of carpet area instead of ambiguous terms such as super area while a real
estate regulator will ensure housing projects declare the status of important
civic clearances.
** In a bid to try and make sure developers /
promoters stick to timelines, the
proposed law states that real estate players will have to park 70 per cent of
funds in a particular bank account so that resources are not diverted and
buyers are not left in the lurch.
** A real estate regulator in every state will
make it mandatory for private developers to register all projects before sale
of property & only after getting all necessary clearances, addressing a
major concern of buyers about incomplete or fraudulent land acquisition.
** Failure to declare status of clearances will
invite up to a maximum 3 years imprisonment or fine that can amount to 10 per
cent of project cost.
** Real eatste players will have to disclose
project details and contractual obligations to ensure transparent, fair &
ethical business practices.
** There can be a model agreement which is
expected to reduce ambiguities in real estate transactions that not many buyers
are familiar with.
** Real estate agents will also be asked to
register with the regulator.
The
agents, an important link between the promoter & buyer, have been unregulated. Once they are
registered, it will be help in curbing money laundering
Private builders are not comfortable with some
of the Real estate bill's provisions & voiced their objections at a meeting
chaired by the housing and poverty alleviation (HUPA) minister Mr. Ajay Maken
and urban development minister Kamal Nath. Those who attended the deliberations
included representatives of developers' associations like Confederation of Real
Estate Developers' Association of India (CREDAI), National Real Estate
Development Council (NAREDCO) and industry chambers Confederation of Indian
Industries (CII) and Federation of Indian Chambers of Commerce and Industry
(FICCI)
Builders / promoters maintain there is no need
for a regulator as they are already subjected to clearances from multiple
agencies. They felt the penal provisions hurt their interests, but the union
government might want to increase the odds in favour of consumers.
A
government official told. "Government put its foot down saying the bill
aims to address concerns and protect interest of buyers. They are being
shortchanged and hence there can not be any compromise"
The fate of the bill was hanging in balance
after differences had cropped up between the housing and urban poverty
alleviation and urban development ministries. Kamal Nath had objected to HUPA's
move of circulating the proposed bill without consulting his ministry.
Finally, the issue reached the Prime Minister
and a meeting of the two ministers was held on Friday where they were asked to
sort out the issue to protect buyers' interest.
The meeting was called after the intervention
of the Prime Minister's Office which asked the ministries of housing &
urban development to resolve differences and quickly finalize the long pending
bill.
Consumer Friendly Provisions..!.
The government hopes that the move for a
strong legislative protection for buyers, which will also rein in unscrupulous
players, will help in gaining the appreciation of middle class voters who have
drifted from Congress in the wake of a series of corruption scams.
Although real estate developers have been
asked to submit their views at the earliest, the government seems determined
not to dilute consumer friendly provisions.
"We are not going to compromise on any
aspect of the bill that hurts the interest of common house buyers," Mr.
Maken told.
If the proposed law goes through there will be
a real estate regulatory authority in every state.
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