Finally, a safety net for home-buyers and jail for rogue realtors In a radical move to regulate real estate sector and offer a safety net to home-buyers, who are often duped by fly-by-night realtors, the Cabinet approved a Bill that paves the way for setting up a sectoral watchdog for the much-maligned sector that is full of corrupt
practices and to keep unscrupulous builders on a leash. The Real Estate (Regulation and Development) Bill 2013, seeks to provide jail term or hefty penalty for developers who put out misleading advertisements about projects.
The Bill has been in the works since 2009 and is being seen as the magic pill with which the government could woo the disenchanted middle class. This is the third time, that the Bill passed the muster after it came up before the Cabinet for the first time last October. The Bill, expected to be tabled in the monsoon session of Parliament, proposes to set up a real estate regulatory authority in every state to decide on consumer complaints. If the Bill sales through, all builders working on projects where the land exceeds 1,000 square metre, will have to register themselves with the regulator before launching or even advertising their projects. Failure to do so will invite a maximum three years’ imprisonment or a fine of up to 10 per cent of the project cost.
At the same time, the regulator will have to approve or reject projects within 15 days. A false advertisement that shows the site or building as more developed than it actually is would attract a penalty of up to 10 per cent of the project cost. And repeat offence could land the developer in jail. Buyers duped by such ads will get full refund of the deposit with interest.
The proposed legislation provides for a clear definition of “carpet area” and bars developers from selling houses/flats on the basis of the ambiguous “super area”. Developers can launch projects only after receiving all statutory clearances, which they will have to post on their websites and submit to the regulator. The Bill also promises buyers refund with interest in case of inordinate delays. Since delays are often caused by builders running out of money, they will be required to maintain a separate bank account for every project to ensure funds are not diverted elsewhere.
The Bill also envisages a real estate appellate tribunal to adjudicate disputes and a national advisory council to advise the regulator. The council is proposed to be headed by the Union housing and urban poverty alleviation minister Ajay Maken, whose brainchild is the Bill that seeks to create a uniform regulatory environment.
It also brings lakhs of unorganised property agents under the purview of the authority. They will have to mandatorily register with the real estate regulator authority.
