The homebuyer finally has reason to cheer as the Lok Sabha has passed the Real Estate (Regulation and Development) Bill, 2016. Here’s everything that you need to know about the bill, which is likely to become an act soon.
The housing sector is one of the most unregulated sectors of the economy. Though developers need to follow various laws, rules and regulations acquire licenses and approvals, yet the sector suffers from lack of accountability and transparency. The Real Estate (Regulation and Development) Bill, 2016, passed by Parliament and awaiting the President’s consent, is expected to transform the real estate sector in the coming years, the buyer standing to gain the most from it.
How the buyer gains from this law
• Standardisation in the sector through introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet area’, ‘advertisement’, ‘real estate project’, ‘prospectus’, ‘real estate agents’, etc.
•Registration of real estate agents. Agents have to quote registration number in every sale facilitated by them. They must provide all information and documents to the allottee at the time of booking of a property
•Registration of all projects, prior to sale, by developers.
•Establishment of a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for developers, buyers and real estate agents.
•Seventy percent of the amount realised for the real estate project from allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover construction and land costs. It shall be used only for that purpose
•Developers cannot put out misleading advertisements which make promises which are not backed by real development on ground. They also need to clearly mention the sanctions and approvals they have obtained and cannot market the project unless the necessary approvals are in place.
•A promoter cannot take more than 10% of the property cost as booking amount without first entering into a registered agreement with the allottee
•Promoter has to take permission of two-third allottees if wants to transfer his majority rights and liabilities to a third party
RERA in action
The stipulated functions of the Real Estate Regulatory Authority (RERA), to be formed at the state level, would bring in greater transparency and accountability in the sector:
Transparency. RERA is expected to bring in transparency by: publishing and maintaining a website of records of all real estate projects for which registration has been given, with such details as may be prescribed, including information provided in the application for which registration has been granted; maintaining a database on the RERA website, entering the names of promoters as defaulters, including project details, revoked registration or penalties if any under the act with reasons for access to the general public; maintaining a database on its website, entering enter the names of real estate agents who have applied and registered under this Act, with such details as may be prescribed, including those whose registration has been rejected or revoked; fixing through regulations for each area under its jurisdiction the standard fees, to be levied on allottees by the promoter or the association of allottees, as the case may be; The promoter shall upon receiving his login id and password from RERA create his web page on the website of the Authority and enter all details of the proposed project for public viewing
Accountability. RERA is expected to bring in greater accountability by: ensuring compliance of the obligations cast upon developers, the allottees and the real estate agents under this Act and the rules and regulations made thereunder; ensuring compliance of its regulations or orders or directions made in exercise of its powers under the Act; it may call upon any developer or allottee or real estate agent, as the case may be, at any time to furnish in writing such information or explanation relating to its affairs as the Authority may require.