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Rajya Sabha passes Real Estate Bill
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SME Times News Bureau | 11 Mar, 2016
The real estate bill, proposing a
real estate regulator designed to protect property buyers’ interests
against unscrupulous promoters, was passed by India's upper house on
Thursday after the government accepted as many as 20 amendments to the
legislation as proposed by a Rajya Sabha Select Committee.
The
Real Estate Regulator (Regulation and Development) Bill, pending before
parliament since 2013, proposes major reform of the country's largely
unregulated realty sector. Once it becomes law, the consumer will have
access to a Real Estate Regulatory Authority for redressal in case of a
grievance.
The bill will make it mandatory for all commercial
and residential real estate projects where the land is over 500 square
metres, or eight apartments, to register with the regulator for
launching a project, in order to provide greater transparency in
project-marketing and execution.
For failure to register, it proposes a penalty of up to 10 percent of the project cost or three years' imprisonment.
By
one of the amendments proposed, the project developer will have to put
70 percent of the money collected from a buyer in a separate account to
meet the construction cost of the project.
A major benefit for
consumers proposed is that builders will have to quote prices based on
carpet area and not super built-up area, while carpet area has been
clearly defined in the bill to include usable spaces like kitchen and
toilets.
The bill has also introduced a new penal provision for
allottees for failure to comply with orders of the regulator. Allottees
would be penalised up to 5 percent of the apartment cost or a year in
jail, or both, for defaulting on payment or any other violation.
"This bill is the need of the hour," Urban Development Minister M. Venkaiah Naidu said while replying to the debate on it.
"It provides for grading of projects, grading of promoters, penalises for giving misleading advertisements," the minister said.
"By
creating a much-needed regulator for the sector at the state and
central levels, this government has initiated the crucial first step to
protect consumers from the prevalent opaque and fraudulent practices
that have so far characterised this sector in India," said independent
member Rajeev Chandrasekhar, who was also member of the Select Committee
that examined the bill.
"This bill ensures that strict
regulations will be imposed on developers to ensure timely construction
and delivery. It further provides that consumers are entitled to a full
refund with interest, if there has been a long delay in the delivery of a
flat," he added.
"It is a first step and it will improve," said former union minister Praful Patel of the NCP participating in the debate.
Complimenting
the government for satisfying the long-pending demand for a real estate
regulator, Ritabrata Banerjee of the CPI-M said the mass of small
housing excluded by the paramters of the bill should also be brought
within its ambit.
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