What Can You Expect?

The winter session of Parliament begins tomorrow and all eyes are on the eagerly awaited Real Estate Regulation and Development Bill. First tabled in the Rajya Sabha in 2013, the bill has undergone several changes which are likely to have a significant impact on the Indian real estate sector.

The reworked bill that includes all suggestions of the Rajya Sabha Select Committee who reviewed the bill threadbare, is awaiting Cabinet nod before it is tabled in the Rajya Sabha.

What can we expect?

The reworked Bill is likely to bring parity between what the developer pays to the customer as delay penalty and what a customer has to shell out. Currently, the difference is glaring – with the customer having to cough up 18% penalty for delays in payment, while a developer ends up paying just Rs 5 per square feet. This one-sided clause in the buyer-seller agreement is likely to go. A half-yearly audit of projects is also on the cards.

The Select Committee also wants 50% or more of the funds collected from buyers to be parked in a separate bank account. Confusion over whether flats should be sold on carpet area or super-built-up area have also been put to rest, with the committee opting for carpet area to be defined as net usable area of an apartment.

Projects which have been delayed by years and have not yet received completion certificates will have to register with the Regulator within 3 months. Any change in approved plan or structural design will have to be cleared by two-thirds of the homebuyers before it can be implemented.

Imprisonment of up to three years, or a penalty of up to 10% of the cost of project for builders who flout norms is another provision that will come as big relief to anxious homebuyers who have been complaining that builders are being let off too easily.

A buyer-friendly Bill?

The provisions of the Bill are heavily tilted towards the homebuyer, but developers seem to have come to terms with it, though they still maintain that several of the provisions including the one with penal provisions are a little too harsh.

“This piece of legislation will bring in much needed transparency for deals. So far, what has been happening is that there is a lot of dichotomy between what the consumers are promised and what they finally get. We are completely supportive of Shri Venkaiah Naidu in so far as he is trying to bring in transparency. But at the same time you cannot undermine the role of the developer,” Niranjan Hiranandani, Co-Founder and MD, Hiranandani Group said.

The government’s move to accept all the recommendations of the Select Committee which had members from all political parties, seems to have helped cut the ice with the Opposition including the Congress – the main opposition party in Rajya Sabha – ready to take a more reasonable stand on the Bill. The three Congress MPs who were part of the Select Committee had however sent a dissent note to the Select Committee’s chairman – Anil Madhav Dave, when the discussions were on earlier this year.

The stage seems to be set for the landmark real estate regulator bill to pass the Parliament test. But with Opposition parties ready to rock and stall parliament over issues like intolerance etc. it could just turn out to be another washed-out session with key legislations getting stalled yet again.

Oineetom Ojah, NDTV