Real Estate Bill: How home buyers stand to gain & lose
Once passed by Parliament and subsequently adopted by each state, it will allow for the creation of a real estate regulator in each state
Jun 10, 2013
Source : The Economic Times

 

DELHI: Last week, the Union Cabinet approved the draft Real Estate (Regulation and Development) Bill 2013 that allows for the creation of a regulator in the real estate sector. Once passed by Parliament and subsequently adopted by each state, it will allow for the creation of a real estate regulator in each state (realty being a state subject). While the Bill applies to residential properties, commercial real estate has been kept out of its purview. Let us examine the pros and cons of the draft Bill in its latest avatar.


HOW YOU STAND TO GAIN

Stress on timeliness and adherence to specifications: Once the Bill gets enacted, it will provide considerable relief to the buyer who faces innumerable difficulties and at times even gets duped by developers and brokers. Anuj Puri, chairman and country head, Jones Lang LaSalle India, points to two specific aspects of the Bill that will benefit buyers. "By imposing strict regulations on the promoter, the Bill looks to ensure that construction is completed on time, and on completion the buyer gets a property that matches the promised specifications," he says.

Mandatory disclosure of project details: The Bill will make it mandatory for developers to disclose details, including minor ones, about their projects on the company website. Says Niranjan Hiranandani, managing director of Hiranandani group of companies: "The details will include specifications, such as the layout plan, carpet area of each dwelling unit, number of units in the project, the amenities being provided, and the approvals received for the project from various authorities. Such disclosures will make it difficult for developers to make ad hoc changes to their project plans at a later stage of development."

Developers will also have to specify the carpet area of each apartment. Selling on the basis of the ambiguous super area will no longer be permitted. Periodic updates on the stage of development that the project has reached will also become mandatory.

Separate accounts for each project: The Bill also makes it mandatory for developers to maintain separate bank accounts with scheduled commercial banks for each of their projects. At least 70% of the corpus raised for the project from buyers (at intervals) will have to be deposited within 15 days of realisation in the account. Developers will have to channelise the money to meet the costs of that particular project. Diversion of funds from one project to another will not be permitted.





What the bill says


Misleading buyers will invite punishment: Developers will be prohibited from advertising or marketing their projects before getting all the necessary clearances and obtaining a certificate of registration from the authority. Says Ganesh Vasudevan, chief executive officer of Indiaproperty.com: "Developers will not be able to collect funds from buyers before they have obtained all the necessary approvals."

The Bill states that if any developer willfully fails to comply with or contravenes its provisions, he will be punished with imprisonment for up to three years, or a penalty that may extend to 10% of the estimated cost of the project, or both. Vasudevan informs that the developer will have to compensate the buyer who incurs a loss on account of advance payment based on false information contained in the developer's advertisement. "The regulatory authority will determine the compensation amount," he adds.

Canceling a sale becomes difficult: Developers will not be allowed to cancel an agreement for sale unless they have sufficient cause to do so. Says Vasudevan: "The developer will need to give due notice to the parties to the agreement. He will also have to refund the amount collected along with interest, as prescribed."

Moreover, in case there is a major structural defect or deficiency in the development or services offered and this is brought to the developer's notice within one year by the buyer, the developer will have to rectify those defects without levying further charges.

Licences compulsory for realty brokers: The Bill also makes it compulsory for real estate agents to register and get licences before they begin to conduct business. Yashwant Dalal, president of the Estate Agents Association of India, believes that this is a positive step by the government which will make real estate broking an organised profession.
 

Latest Realty News

AMC to evacuate occupants of 19 ‘high risk’ buildings
Jun 10, 2013
AURANGABAD: The Aurangabad Municipal Corporation (AMC) has said it would "forcefully" evacuate occupants of 19 dilapidated buildings in the limits of the civic body.
How real estate Bill will benefit buyers
Jun 10, 2013
DELHI: The Cabinet nod for the Real Estate (Regulation and Development) Bill 2013 has been met with approval, concerns and questions.
Real estate Bill, a damp squib
Jun 10, 2013
DELHI: The Real Estate (Regulation and Development) Bill, 2011, focuses on the contractual relationship among three parties: promoter, the allottee or buyer, and the regulatory authority. The Bill essentially seeks to secure the rights of the buyer against unscrupulous actions by the promoter.
Bhandup, Mumbai: From downmarket to residential hub
Jun 10, 2013
MUMBAI: Despite the skyrocketing real estate prices in Mumbai, the residential market in India's financial capital continues to hold its own-- end users and investors are as active as ever. However, many areas have reached saturation point, in terms of further development potential, leading to the emergence of new regions. The focus has shifted to areas that weren't earlier considered lucrative. Bhandup is one such area.
Are realty prices set to fall?
Jun 10, 2013
DELHI: Most property buyers seem to think so and are waiting for a price correction before investing in it, according to a recent online survey conducted by Economictimes.com.
Builders' Association of India hopes Real Estate Bill is passed in monsoon session
Jun 10, 2013
MUMBAI: Builders' Association of India (BAI) today said it has welcomed Centre's move to clear the Real Estate (Regulation and Development) Bill and hoped that the same would be passed in the Parliement's monsoon session.
Crime Branch sniffs money in overseas accounts
Jun 10, 2013
BHUBANESWAR: The Crime Branch (CB), probing the alleged multi-crore fraud by controversial Umamani Home Creations, suspect that the company's chairman-cum-managing director Narayan Chandra Nayak diverted crores of rupees to bank accounts of his relatives, staying in California. Nayak was arrested on June 5.
3BHK a hit among buyers and developers in Gurgaon
Jun 09, 2013
DELHI: Guragon has always been an abode to large and spacious residences that offer amenities that are at par with the best in the world. Home buyers in Gurgaon display a keen preference for larger homes which is depicted by the huge demand for 3BHK units vis-à-vis 1 and 2BHK homes.
Nallagandla property market undergoes development
Jun 09, 2013
HYDERABAD: Nallagandla in Hyderabad is witnessing a flush of real estate developments. It is located on the north western zone of the city which is currently under the radar of the real estate developers. Gachibowli, Miyapur, Nizampet, Beeramguda, Kukatpally and many adjoining localities are also undergoing transformation.
Astha state head detained
Jun 09, 2013
BHUBANESWAR: The Crime Branch (CB) on Friday detained Subhransu Lenka, state coordinator of controversial Astha International Limited, a Surat-based money circulation company, accused of embezzling crores of public deposits in Odisha.

Latest Realty News Of State

Realty Talk's