by Mr. Anuj Puri, JLL India
The Central Government cabinet yesterday (june
4, 2013) approved the long pending Real Estate Regulator Bill paving the way
for providing the much needed transparency by seeking to regulate the hitherto
largely unregulated housing sector in India.
By applying this bill on all projects above
4,000 square meters in size, the ambit if quite large and seeks to cover all
major private residential developments across India.
As and when the Bill gets enacted, it
will look to provide considerable relief to the ordinary buyer & investor who goes through innumerable
obstacles when buying a property and at times is duped by even small
developers, promoters, builders & brokers.
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| Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India |
By imposing strict regulations on the
Promoter / builder, the Bill looks to ensure that construction is not only
completed in a timely manner.But that on completion the buyer gets the property
as per the specifications that he had been promised.
Regulatory Authority & the
Appellate Tribunal..!
Further, by seeking to establish the
Regulatory Authority & the Appellate Tribunal, the Bill aims to create a
dispute resolution mechanism and provide a specialized forum for hearing
disputes related to property matters & address the grievances of the
consumer who otherwise has had recourse to either a prolonged litigation
process in a court of law or / consumer courts.
The real estate bill also seeks to
prevent developers / promoters from putting out misleading advertisements which
make promises which are not backed by the real development on ground.
They also need to clearly mention the
sanctions & approvals they have obtained and cannot market the project
unless the necessary approvals are in place. By making registration of the
project compulsory with the Regulatory Authority, the Bill aims to provide
greater transparency in project marketing and execution.
All plans, approvals need to be put up
by the developer on the Regulator's website. The developer needs to set aside
70 % or / less percentage in a separate
account which shall consist of the monies collected from the allottees and this
amount shall be utilized only towards he particular project and can not be
diverted. The developer is required to declare the time frame for developing
the project and has to adhere to such timelines.
The Bill in its latest form has agreed
to certain suggestions made by the states, such as the percentage amount of 70
% or less being maintained in a separate account. The Bill also seeks to impose
monetary penalties on the promoter with repeat offences also liable for a jail
term.
Bill works both ways..!
The Bill works both ways. While it
aims to hold the developers accountable, it also looks to ensure that the
allottees do not default in making payments. Thus, by providing penalties for
both the promoters and the allottees, the Bill seeks to ensure that
non-compliance is minimal. On enactment, the Bill seeks to ensure that real
estate transactions are carried out in a just and equitable manner.
The category of real estate brokers
has also been brought under the ambit of this Bill by making their registration
mandatory when the promoter provides the project details to the Authority.
The Bill also seeks to define the
carpet area which shall be a standard definition across India.
The Bill also seeks to provide model
Agreement to Sell under which the promoter is liable to furnish the necessary
project details to the allottee while also becoming responsible for providing
project level details as demanded by the buyer.
The real estate Bill will establish a
central Appellate Tribunal with the individual states responsible for setting
up the Regulatory Authority at the state level.
Though the Bill will turn out to be a
boon for the property purchasers and the consumers, it has received a lot of
criticism from developers for not being inclusive in its approach towards them.
The Bill in its current form does not provide for any relief to them in terms
of getting through the cumbersome approvals and permissions process in any
expeditious manner.
It has been a constant complaint by
developers / promoters in India that they experience long and inordinate delays
besides the difficulty in obtaining approvals for construction from the
multi-headed Government agencies, and they have stressed on the need for a
single-window clearance to cut through the red tape. This issue does not find any
mention in the Bill.
List of disclosures..!
Also, though the list of disclosures
to be furnished by the Promoter is fairly exhaustive, it could still be
benchmarked against the best practices of the developed markets so as to bring
the real estate markets in India in more conformity with such markets where
regulations have been existing for some time with relevant lessons to be learnt
from their experiences.
The Bill has received the Cabinet
Approval and could either be brought in by passing an Ordinance, while the
Parliament & other parties could insist on a discussion in the legislature
and then putting the Bill to vote. It then requires the signature of the
President. The road to becoming an Act is still being paved.
About the author..
Mr. Anuj Puri is Chairman
& Country Head at Jones Lang LaSalle India
For Media Contact:
Mr. Arun Chitnis, Assistant Vice
President, Marketing
Jones Lang Lasalle India
Level 6, Amar Avinash Corporate Plaza
Bund Garden Road, Pune - 411 001. Tel:
020 3093 0441 Fax: 020 40196101
Mob: +91 9657129999
Website: www.joneslanglasalle.co.in
Blog:
www.joneslanglasalleblog.com/realestatecompass
Email : Arun.Chitnis@ap.jll.com
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