Indian Real Estate Bill 2016 to foster a happy
alliance between Property Buyers & developers - M.Venkaiah Naidu
Rajya Sabha and lok-sabha clears Real Estate Bill seeking to make consumer
the king
Bill to foster a happy alliance between consumers and developers, says Shri
M.Venkaiah Naidu
Notoriety in real estate sector needs to be ended to encourage investment
flows, says the Minister
If telecom sector with a few operators has a regulator, real estate sector
with over 76,000 companies needs one-Shri Naidu
Original Bill of 2013 undergoes substantial changes for the bette
Rajya Sabha and Lok sabha approved the Real Estate
(Regulation and Development) Bill, 2016
on March 11, 2016 that seeks to protect the interests of the large
number of aspiring house buyers while at the same time enhancing the
credibility of construction industry by promoting transparency, accountability
and efficiency in execution of projects.
The Bill seeks to put in place an effective regulatory mechanism for
orderly growth of the sector which is the second largest employer after
agriculture.
Moving the Bill pending in Rajya
Sabha since 2013 for further consideration and passing, Minister of Housing
& Urban Poverty Alleviation Mr. M. Venkaiah Naidu stated that over the years
the sector has acquired a degree of notoriety which needs to be addressed to
enable enhanced flow of investments, for which the Government has announced
several incentives in the Budget for 2016-17 and earlier.
Mr. Naidu further said
that consumer has become the king in telecom sectorfurther to introduction of a
regulator. While there are only a few operators in telecom sector, a total of
76,044 companies are involved in real estate sector including 17,431 in Delhi,
17,010 in West Bengal, 11,160 in Maharashtra, 7,136 in Uttar Pradesh, 3,054 in
Rajasthan, 3,004 in Tamil Nadu, 2,261 in Karnataka, 2,211 in Telangana, 2,121
in Haryana, 1,956 in Madhya Pradesh, 1,270 in Kerala, 1,202 in Punjab and 1,006
in Odisha.
Stating that real estate
sector contributes about 9% GDP, the Minister informed the House that between
2011 and 2015, new projects in the range of 2,349 to 4,488 were launched every
year amounting to a total of 17,526 projects with investment value of Rs.13.70
lakh cr in 27 cities including 15 state capitals. According to industry
information, about 10 lakh buyers invest every year to own a house of their
own.
Shri Naidu asserted that
with so many operators in the sector and such huge investments at stake, regulating
the real estate sector has become necessary in the interest of consumers and
developers. He said: “Consumer shall be the king as in telecom sector and the
developer obviously the queen. And there shall be a happy marriage between the
two for both to live happily ever after and the Bill seeks to forge such a
happy alliance for the benefit of real estate sector.”
The Minister said that
several rounds of consultations were held with consumer and developer bodies,
state governments and other stakeholders
before and after introduction of the Bill in Rajya Sabha in 2013
and as a result, the Bill has undergone
substantial changes benefitting the sector as a whole. Shri Naidu outlined the
improvements made in the Bill of 2016 as follows:
1.The Government has gone beyond the recommendation of the Select Committee
and now requiring developers to deposit 70% of the collections form buyers in a
separate accounts towards the cost of construction including that of land as
against a minimum of 50% suggested by the Select Committee;
2. Norms for registration of projects has been brought down to plot area of
500 sq.mts or 8 apartments as against 4,000 sq.mt proposed in the draft Bill in
2013 and 1,000 sq.mts or 12 apartments suggested by the Standing Committee;
3. Commercial real estate also brought under the ambit of the Bill and
projects under construction are also required to be registered with the
Regulatory Authority. About 17,000 projects are reported to be at various
stages of development;
4.Capret area has been clearly defined which forms the basis for purchase
of houses, eliminating any scope for any malpractices in transactions
5.Ending the earlier asymmetry which was in favour of developers, both
consumers and developers will now have to pay same interest rate for any delays
on their part;
6.Liability of developers for structural defects have been increased from 2
to 5 years and they can’t change plans without the consent of two thirds of
allottees;
7.The Bill provides for arranging Insurance of Land title, currently not
available in the market which benefits both the consumers and developers if
land titles are later found to be defective;
8.Specific and reduced time frames have been prescribed for disposal of
complaints by the Appellate Tribunals and Regulatory Authorities; and
9.A provision is now made for imprisonment of up to 3 years for developers
and up to one year in case of real estate agents and consumers for any
violation of Tribunals and Regulatory Authorities.
The Bill requires project
promoters to register their projects with the Regulatory Authorities disclosing
project information including details of promoter, project including schedule
of implementation, lay out plan, land status, status of approvals, agreements
along with details of real estate agents, contractors, architects, structural
engineers etc. Shri Naidu said that this enables transparent, accountable and
timely execution of projects.
The Minister further said
that the Real Estate Bill,2016 enables the people meet their genuine
aspirations of owning a house including those of urban poor by giving a fillip
to affordable housing initiative under which the Government intends to enable
construction of 2 crore by the year 2022 under Prime Minister’s Awas Yojana
(Urban).
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