The Real Estate (Regulation and Development) Bill, 2013, as approved by the Union Cabinet in its meeting on 4th June 2013, was introduced in the Rajya Sabha today . The Bill has been piloted by Dr. (Ms) Girija Vyas, Minister of Housing and Urban Poverty Alleviation . Soon after its introduction, the Bill was referred to the Parliamentary Standing Committee on Urban Development for review and making suggestions.
The Bill provides for a uniform regulatory environment, to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector and has been much awaited by all aspiring home buyers.
The Real Estate (Regulation and Development) Bill, 2013 is a pioneering initiative to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects.
The Bill has been prepared by the Government after extensive consultations with States, experts and stakeholders. The Bill has been supported by the States along with Ministry of Consumer Affairs, the Competition Commission and Tariff Commission among others.
The Bill is being proposed under Entries 6, 7 and 46 of the Concurrent List of the Constitution of India, which deals with Transfer of Property, Registration of Deeds and Documents, and Contracts.
It contains elaborate provisions to bring in the much needed transparency in real estate dealings through provisions for registration of real estate projects and real estate agents with the Real Estate Regulatory Authority; functions and duties of promoters and agents; rights and duties of allottees etc., The Bill once enacted will lead to establishment of Real Estate Regulatory Authority and Real Estate Appellate Tribunal in every State for registration of all real estate projects and for speedier dispute resolution. Stringent penalties have been sought to be imposed on habitual offenders. This it is believed will act as a deterrent for those few erring builders who bring bad name to the developer community at large.
Currently, the real estate and housing sector is largely unregulated and opaque, with consumers often unable to procure complete information, or enforce accountability against builders and developers in the absence of effective regulation. The Bill is expected to ensure greater accountability towards consumers, and to significantly reduce frauds and delays. The Bill aims at restoring confidence of the general public in the real estate sector; by instituting transparency and accountability in real estate and housing transactions which in turn will enable the sector to access capital and financial markets essential for its long term growth.
The Bill is also expected to promote regulated and orderly growth through efficiency, professionalism and standardization. It seeks to ensure consumer protection, without adding another stage in the procedure for sanctions.
Benefits and Advantages of Real Estate Bill, 2013
- The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as ˜apartment™, ˜common areas™, ˜carpet area™, ˜advertisement™, ˜real estate project™, ˜prospectus™ etc. Introduction of the concept of using only ˜carpet area™ for sale which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices.
- The Bill like other sectors such as telecom, electricity, banking, securities, insurance etc. provides for specialized regulation and enforcement which includes both curative and preventive measures, with powers to enforce specific performance, not available under the consumer laws. The Authority has powers to give directions for specific performance powers to impose penalty for non-registration of projects including imprisonment for continuous violation upto 3 yrs and impose penalty in case of other contraventions.
- The Bill proposes to register real estate agents which have hitherto been un-regulated, with clear responsibilities and functions, thereby leading to money trail and curbing money laundering.
- The Bill aims to ensure consumer protection, by making it mandatory for promoters to register all projects, prior to sale; and only after having received all approvals from development/municipal authorities thereby protecting buyer investments.
- The Bill will promote transparency and fair and ethical business practices, relating to transactions, through disclosure of project details and contractual obligations vis-Ã -vis the project and the buyer, promotinginformed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions.
- The Bill seeks to establish a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for the promoter buyer and the real estate agents.
- The Bill will infuse professionalism and promote planned development of the real estate sector through the promotional role of the Regulatory Authority.
- The Bill will ensure timely completion of projects, and prevent fund diversion.
- The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.
- The Bill will catalyze domestic and foreign investment into the sector, thereby contributing to enhanced activity, and increase in GDP growth.
The salient features of the draft Bill are as under:
Applicability of the Bill:
The proposed Bill applies to residential real estate i.e. housing and any other independent use ancillary to housing. However it shall not apply where the area of land proposed to be developed does not exceed 1000 square meters or the number of apartments proposed to be developed does not exceed 12, inclusive of all phases, or an area or number of apartments as notified by the Central Government on recommendations from the appropriate Government, which may be different for different States or Union territories but not more than 1000 square meters or 12 apartments.
The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as ˜apartment™, ˜common areas™, ˜carpet area™, ˜advertisement™, ˜real estate project™, ˜prospectus™ etc. Introduction of the concept of using only ˜carpet area™ for sale, which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices.
Establishment of Real Estate Regulatory Authority:
Establishment of one or more ˜Real Estate Regulatory Authority™ in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, with specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest;
Registration of Real Estate Projects and Registration of Real Estate Agents:
Mandatory registration of real estate projects and real estate agents who intend to sell any immovable property, with the Real Estate Regulatory Authority on real time basis without adding another layer of approvals.
Mandatory Public Disclosure of all project details:
Mandatory public disclosure norms for all registered projects, including details of the promoters, project, layout plan, plan of development works, land status, carpet area and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc.;
Functions and Duties of Promoter:
Duty of promoters towards disclosure of all relevant information and adherence to approved plans and project specifications, obligations regarding veracity of the advertisement for sale or prospectus, responsibility to rectify structural defects, and to refund moneys in cases of default;
Compulsory deposit of seventy percent or such lesser percent as notified by the Appropriate Government, to cover the construction cost of the project, of funds received by the Promoter, in a separate bank account:
Functions of Real Estate Agents:
Real estate agents not to facilitate the sale of immovable property which are not registered with the Authority required under the provisions of the Act, obligation to keep, maintain and preserve books of accounts, records and documents, obligation to not involve in any unfair trade practices, obligation to facilitate the possession of documents to allottees as entitled at the time of booking, and to comply with such other functions as specified by Rules made in that regard;
Rights and Duties of Allottees:
Right to obtain information relating to the property booked, to know stage-wise time schedule of project completion, claim possession of the apartment or plot or building as per promoter declaration, refund with interest in case of default by the promoter, and after possession entitled to necessary documents and plans. Duty of allottees to make necessary payments and carry out other responsibilities as per the agreement;
Promotional role of Real Estate Regulatory Authority:
The Authority to act as the nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector;
Fast Track Dispute Settlement Mechanism:
Establishment of fast track dispute resolution mechanisms for settlement of disputes, through adjudicating officers (an officer not below the rank of Joint Secretary to the State Government) to be appointed by the Authority, and establishment of an Appellate Tribunal to hear appeals from the orders of the Authority and the adjudicating officer;
Establishment of Central Advisory Council:
Establishment of Central Advisory Council to advise the Central Government on matters concerning implementation of the Act, with a mandate to make recommendations on major questions of policy, protection of consumer interest and to foster growth and development of the real estate sector. The Council to have among others, five representatives of State Governments, to be selected by rotation;
Establishment of Real Estate Appellate Tribunal:
Establishment of Real Estate Appellate Tribunal, by the State Government to hear appeals from the orders or decisions or directions of the Authority and the adjudicating officer. The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court with one judicial and one administrative/technical member;
- Punitive provisions for non registration of a real estate housing project – Penalty which may extend up to 10% of the estimated cost of the real estate project as determined by the Authority .
- For continued violation or non-compliance of order for registration – punishment with imprisonment for a term which may extend up to three years or with fine which may extend to a further 10% of the estimated cost of the real estate project, or with both as determined by the Authority .
- For knowingly providing false information or willful contravention at the time of applying for registration and for other contraventions under the law A penalty which may extend up to 5% of the estimated cost of the real estate project as determined by the Authority.