Realty Regulator Passed In Rajya Sabha: Everything You Need To Know

March 10, 2016

The most awaited legislation for the real estate sector finally got passed with all ‘Aye’s in the Rajya Sabha earlier today. Calling it a historic day, the Union Minister for Housing thanked all the members present for supporting and passing the bill with complete consensus. The legislation which aims to regulate the sector, bring in transparency and help protect consumer interests will now face the Lok Sabha where the ruling party enjoys majority and therefore does not really face any more hurdles. Here is how the provisions of this bill will affect every stakeholder.

Timeline of the bill

August 2013: First introduced by UPA Govt

February 2014: Parliamentary Standing Committee submits report

April 2015: Bill came for Cabinet clearance

April 2015: Congress rejects watered down version & bill goes to Select Committee of Rajya Sabha

December 2015: Current bill gets cabinet nod

March 2016: Rajya Sabha passes the bill

Provisions favouring the buyers

• Parity in delay penalty, which means if the builder demands 18% on your delayed payment, he should also cough up 18% if your house is delayed.

• Applicable to residential & commercial real estate projects of above 500 square metres and 8 apartments. But the states can reduce the area if they wish to.

• 70% funds which are taken from the buyer have to be kept in separate escrow account so it is not diverted by the developer for other projects

• Any change in project or flat or building plan to be vetted by 2/3 homebuyers

• The Bill defines carpet area as net usable floor area of an apartment, excluding the area covered by its walls

• Construction to start only after getting all statutory clearances

• Developers can advertise projects only after getting clearances

• Misleading ads to be made punishable offence

• First time offenders will be penalised at 10% of project cost. Repeating offence to result in jail term

• All clearances, project details to be on regulators’ website

• Appellate Tribunals will now be required to decide cases in 60 days as against the earlier provision of 90 days and Regulatory Authorities to dispose of complaints in 60 days while no time frame was indicated in earlier Bill

”Customer should be ‘king’ and developer should be ‘queen’, there should be happy marriage”- Union Housing Minister Venkaiah Naidu

Provisions against the builders

• Bill to be applicable retrospectively, projects awaiting Completion Certificate to fall under the Bill

• All ongoing projects will have to comply with provisions of the Bill

• Municipal bodies and government agencies not covered by the Bill

• No provision of single window clearance, in this case the regulator may add another layer to the longer processes already delaying projects.

• Non-compliance to attract 3 year jail term with or without fine of 10% of total project cost
Insert image here- how sector

”This is only a regulation not strangulation’’- Union Housing Minister Venkaiah Naidu

Important remarks made by Union Minister Naidu in Rajya Sabha

• Housing Secretary organized a day-long workshop for all stakeholders before finalizing the draft bill

• There will be no discrimination of any kind on basis of religion, region, caste, creed or sex and gender for home buyers and we will include that in the rules.

• There has to be single-window clearance for all approvals. We are talking with all concerned ministries to streamline the process.

Why govt believes sector needs regulation

• Finance Ministry directed Housing Ministry for early enactment of the bill to reduce black money in the sector

• CCI emphasized on early enactment of the bill to check malpractices in the sector

• Huge unsold stock and consumer confidence at an all-time low

• NHB demanded for early enactment as lending risky without regulatory mechanism

• Foreign investors are wary due to regulatory vacuum

• Regulatory oversight will ensure Housing for all

Project delays across the country

Total delayed projects- 4479

Average delay- 20 to 33 months

Approx over 3 lakh units each delayed in NCR & MMR