DELHI: Real estate buying becomes a complex matter for a common man many times. The buyer gets bedazzled by a sheer number of options available in the market. At the same time, the transaction process in itself becomes tedious and non-transparent in absence of sufficient, right information. The buyer has to mainly rely on brokers and developers. At times, the transaction gets entangled between disagreement and litigation due to a number of reasons.
In such a scenario, the Real Estate Regulatory Bill, which is being passed by the Union Cabinet, is expected to cut the clutter. Let’s see the three ways through which a common man would be benefitted.
Control on project delays: A large number of real estate projects are launched in the market at a pre-launch stage. This means that a developer is yet to obtain all the necessary approvals required to launch the project. As per the provisions of the Bill, a builder cannot launch the project until he gets all the approvals from respective authorities. This will rule out the possibilities of project delays being caused due to absence of necessary approvals. A buyer will also be entitled for refunds if a project is delayed by any other reasons.
This provision supports the Guidance Note issued by the Institute of Chartered Accountants of India (ICAI), which says that a developer cannot recognize revenue in his books of accounts until he gets all the approvals in place.
The Bill, once it becomes an Act, would compel the developer to maintain separate accounts for each of their projects. As per industry experts, developers tend to park funds received from the sale of units in one project in launching or completing another. Thus delays caused due to this reason will also come under control.
“The provisions in the Real Estate (Regulation and Development) Bill 2013 like escrow mechanism, timely completion of projects and project to be launched after all sanctions are good for the industry. It will help industry grow in an organized way and check entry of small-time, unorganised developers,” says Pradeep Jain, Chariman, Parsvanth Group.
Disclosure of accurate information: The issues related with specifications will also be minimized. Developers will be required to put project-related information on their websites. This will include project plans, layouts, specifications of materials being used in the construction, etc.
A developer will also specify the actual carpet area being provided to the customer. “The bill is intended to regulate and standardise the transactions in the industry to bring in transparency in internal as well as external transactions. This will help construct clean, clear, principled and balanced real estate system to reduce the burden from the customer as well as the developers,” says T Chitty Babu, Chairman and CEO, Akshaya.
Regulatory oversight and dispute resolution: The provision of a Real Estate Regulator and an Appellate Tribunal will help in quicker resolution of real estate related disputes and make developers more accountable.
Presence of a specialised and dedicated dispute resolution mechanism would also curb malpractices, frauds and frivolous behavior, and thus help protect and promote consumer interest.