Investment in a booming market such as real estate has had welcoming results for buyers or investors in the recent years. Therefore, this rapidly growing market has influenced the buyers to invest in properties such as an apartment, an individual house or even barren land. Even though these investments appear to be saucy ones, the plight of these buyers is at the hands of property dealers, who carry out deals with the sole purpose of luring the consumers into buying whatever they are selling. This is often a case with first-time buyers or newbies, who have limited knowledge of things to be kept in mind while making such massive investments, thus are prone to vulnerabilities. These buyers are hoodwinked into buying sub-standard lands or houses by means of misrepresentation or snazzy advertisements. Often they donâ€™t investigate enough and are unable to notice the litigation involved in the property and thus become victims of legal suits.
To safeguard and protect the interests of such buyers and bring transparency in the real estate sector, Real Estate Bill was introduced. It was originally introduced in 2013 by UPA Government and since then, changes have been made to it by the present government. The bill protects consumers against delays in completion of housing projects, ensures efficiency in all property-related transactions, improves their transparency, boosts accountability of developers and attracts more investments on the part of real estate buyers. The bill known as Real Estate (Regulation and Development) Bill has the following highlights:
- All the Real Estate developers will have to register their upcoming projects with a real estate regulating authority, who will seek all the details of the project such as land agreements, layout plans and the consigning agent. The authority will be responsible for settling any disputes which come up and reach a conclusion that whether a project has been logically thought through or not.
- No commercial or housing project can be launched without the consent of real estate regulator in that state.
- The upcoming projects cannot be advertised anywhere through any means, without the prior registration with the authority.
- The ongoing projects, which havenâ€™t received the completion certificates yet, are to be subjected to same rules.
- Properties cannot be sold on the basis of super area. Rather, the developers have to showcase the carpet area before putting any advertisements.
- Real estate regulator should keep an eye on the layout plans of the developer that need to be disclosed at the time of registration itself.
- Developers need to mention the details about all the people involved in the project, including architect, structural engineer, contractors etc.
- Approximately two-third of buyerâ€™s consent is needed, if the real estate developer wants to alter any structural designs and specifications of the building.
- The developer is liable to refund all the money in case of structural defects or any other default with the project.
- Any third party who is interested to sell a flat or an apartment has to register its name with the regulator.
- Any non-compliance with law on the part of broker amounts to penalty.
- Promoter has to deposit 50% of the funds raised through a prospective project from a buyer in a separate bank account, called escrow account. This money cannot be used for any other purposes, than for which they have been raised.
- If the real estate developers violate any rules set by the regulating body, they may face penalties and projects could also be de-registered.
- The amount of penalty could be up to 10% of total project cost, and any false information to the buyer about the project could lead to fine of 5%.
- The bill will help in tracking down the source of black-money prevailing in the economy. This kind of money is costing the government billion dollars in lost taxable income.
The original Real Estate bill passed was later amended by the NDA. The bill passed in favor of real estate buyers has the following benefits:
- Real estate sector will become better organized
The mismanagement and discrepancies prevailing in the real-estate sector will be wiped out. Formation of the Real-Estate regulation authority in every state will help in closely monitoring the construction projects. The authority will also grade the real-estate projects, helping customers make better decisions.
- Real-estate projects will be completed on time and handed-over
This is the biggest problem faced in real estate sector as buyers donâ€™t get a timely delivery of their purchased property. This often happens because the sellers often use the advance-money collected from buyers for their personal purposes. The bill will make sure that the 50% of total collected funds in the escrow account can only be used for construction purposes.
- Disclosure of information and details
The seller has to mandatorily disclose all information related to layout plan, contractors, structural engineers, estimated duration of the project and other relevant details to the buyers as well as RERA (Real Estate Regulating Authority).
- Appropriate penalty for any default
The seller is liable to pay the same amount as penalty which he is charging from the buyer for delay in payment. Also, the seller is not to violate any orders of RERA or appellate tribunal. The violation can amount to jail term of up to 3 years.
- After-sales service
In case the buyer finds any structural deficiency in the property, he/she is free to contact the seller or developer within one year of possession of property. The RERA would ensure that proper after-sales service is provided to the buyer.
Through the above features, we could observe that Real Estate Bill is going to be immensely delightful for our real estate buyers. But will it have a revolutionary effect on the Indian Realty Market? Or will it shake up the property sector?
Do share your opinions tooâ€¦.