Rajya Sabha has finally approved the Real Estate Bill 2016 which aims to protect the interests of the large number of aspiring house buyers. Before the approval, the original Real Estate Bill of 2013 undergoes substantial changes for the better.
The approved new Real Estate Bill 2016 will enhance credibility of construction industry, promotes transparency, accountability & efficiency in execution of projects.
There are several benefits of the Real Estate Bill 2016 for the consumers such as no project will be allowed to be sold to the buyer, unless it has all necessary permissions from local authorities to start construction.
Key highlights of the Real Estate Bill 2016
- The Bill requires project promoters to register their projects with the Regulatory Authorities disclosing project information including details of promoter, project including schedule of implementation, lay out plan, land status, status of approvals, agreements along with details of real estate agents, contractors, architects, structural engineers etc.
- Seeks to put in place an effective regulatory mechanism for orderly growth of the sector which is the second largest employer after agriculture.
- Developers are now required to deposit 70% of the collections form buyers in a separate escrow accounts towards the cost of construction including that of land as against a minimum of 50% suggested by the Select Committee. This will prevent halt of construction of the project if the developer runs out of the cash.
- The minimum plot area for registration of residential projects has been brought down to 500 Sq.Mt. or 8 units and 1,000 sq.mts or 12 apartments compared to 4,000 sq.mt proposed in the draft Bill in 2013.
- Commercial projects which are under construction also required to be registered with the Regulatory Authority.
- Capret area has to be clearly defined by the developer which forms the basis for purchase of houses, eliminating any scope for any malpractices in transactions. No developer will be allowed to sell the housing units based on Super Area (flat area plus common area).
- Both consumers and developers will now have to pay same interest rate for any delays on their part.
- Liability of developers for structural defects have been increased from 2 to 5 years and they can’t change plans without the consent of two thirds of allottees.
- The Bill provides for arranging Insurance of Land title, id land title are found to be defective at later stage, it will help both developers and consumers.
- Specific and reduced time frames have been prescribed for disposal of complaints by the Appellate Tribunals and Regulatory Authorities.
- Provision for imprisonment of up to 3 years for developers and up to one year in case of real estate agents and consumers for any violation of Tribunals and Regulatory Authorities.
- The developers can not mislead the perspective buyers by making untrue claims or publishing untrue pictures of the projects in advertisements. Doing so, the developers will be fined 10% of the cost of the whole project and any repeated offense will be liable for imprisonment.
The Real Estate (Regulation & Development) Bill, 2016 was passed by Rajya Sabha on March 10, 2016 and will soon become Law.