The report of the Parliamentary Select committee on the Real Estate (Regulation and Development) Bill, 2013, tabled on the floor of the Rajya Sabha has not only rectified the many dilutions that were made to the original Bill, it has also built in additional safeguards to regulate all kinds of transactions between home-buyers and builders.
The 21-member committee headed by BJP MP Anil Madhav Dave was constituted after protests by Opposition parties over the issue of NDA government watering down several provisions of the original Bill introduced in 2013.
The amended draft of the Bill, based on the report of the parliamentary committee, will be placed before the Cabinet during its very next meeting. Post Cabinet approval, it will be re-introduced on the floor of the House.
The report underlines that the proposed law must strike a balance so that it does not “kill the investment in the sector” but at the same time ensure that “the growth of this sector cannot be at the cost of consumers”.
“Regulation of the real estate industry will not only protect buyers’ interest, it will also ensure growth of the sector through better flow of finances from foreign direct investment and Indian financial institutions. After meeting stakeholders across the country, we have realised that only transparency will stem corruption and hence have recommended that all project details, that have to be compulsorily disclosed by builders, can be accessed by buyers,” said panel chairperson Dave.
One of the biggest pro-consumer relief provided in the amended draft bill, based on the panel report, is bringing parity in the skewed builder-buyer power equation. Home-buyers, who until now were left with no choice but to sign along the dotted lines of an agreement drafted by developers, will have a Central government issued Model Draft Agreement to fall back on.
“The agreement will ensure that the until-now measly interest rates paid by defaulting builders should brought on par with the interest rates that buyers, who default on their payments, are required to shell out,” said panel member and Bengaluru Member of Parliament Rajeev Chandrashekhar.
In so far as assuaging fears of developers regarding them being penalised for delays owing to slow approvals process, the panel has yielded to a long-standing demand of the industry for a single window clearance. It has also allowed builders to retain only ‘50 per cent or higher per cent’ of the sale proceeds exclusively for construction instead of 70 per cent as proposed in the original bill (and lowered to ‘50 percent or lesser per cent’ in its May 2015 amended version).
Every state will have to set up a Regulatory Authority and as quasi-judicial Appellate Tribunal as the two tier-dispute resolution mechanism.
The panel has not only retained the existing clause for imprisonment in case of developers’ repeatedly failing to register their projects with the regulatory authority, it has also enhanced the punishment by introducing a three-year term or 10 per cent of the project cost as penalty or both in cases where developers fail to abide by the orders of the Appellate Tribunal.
“The committee has refused to buy the paranoid argument by developers that the imprisonment provision would sound the death knell of investments in the sector,” said Chandrashekhar.