There are cheers for the home buyers on a lookout as the real estate bill is likely to be passed in the winter session of parliament. The bill has strict clauses which discipline defaulting realtors, crackdown on fly-by-night operators and proposes jail term for up to three years for repeat offenders.
The Real Estate (Regulation and Development) Bill was referred by Rajya Sabha to a 21-member select committee on May 6 for its assessment and it asked the committee to submit its report by the last day of the first week of the next session of Parliament, which is the current monsoon session. It has gone through revisions and amendments after having been passed by the Cabinet.
Mr. Vikas Gupta, Joint Managing Director of Earth Infrastructures, said that the bill will protect the interest of buyers. There have been many fraud cases in the past. The reforms that will be brought about by the bill will prevent such fraudulent cases from happening in the future.
It is being reported that all 38 recommendations made by the select committee have been given approval. The major recommendations of the bill listed that realtors will not be allowed to divert more than 50% of money collected from a buyer to other projects. The cap of 50% can be increased at the discretion of the state governments but cannot be lowered. This will make it hard for builders to acquire more land if their capital is locked up in another project. In metro cities, the cost of construction can be lowered to 5-10% of the cost of acquisition.
Another reform in the bill restricts promoters from selling their flats in under construction projects prior to getting it registered and from accepting more than 10% of the total cost of flat without registering a written agreement for sale with the purchaser. Mr. Vikas Gupta of Earth Infrastructures also said that the builders will be required to state tentative date of possession. This will further safeguard the buyers.
Any housing project on more than 500 sq metre will have to register with the proposed real estate regulator. Earlier the cap was 1000 sq metre. Failure to pay interest rate by the promoter or allottee can lead to penalties and subsequent violations may lead to a three-year jail term. Also, every state is required to set up a Regulatory Authority and as quasi-judicial Appellate Tribunal as the two tier-dispute resolution mechanism. The carpet area has also been redefined to prevent builders from including the balcony area into the carpet area.