Real Estate Bill – how it favours home buyers

favours for home buyers

The Real Estate Bill which was passed in the Rajya Sabha on Thursday largely seeks to protect the interest of home buyers, at the same time aims to bring more transparency, accountability and efficiency in a sector which has hitherto been fundamentally unregulated and unorganised.

Delays in project delivery by developers, zero accountability on builders and opacity in project details and payment structures has blemished the credibility of the real estate sector for a long time resulting in lack of trust of buyers, which this bill aims to set right.

Moving ‘The Real Estate (Regulation and Development) Bill, 2015′ for consideration and passage, Urban Development Minister M Venkaiah Naidu said, it will not only bring transparency but also help in regulating generation of black money, to which the real estate sector contributes the largest in the country.

Here are things home buyers need to know and how the bill speaks in favour of them –

• Timely completion of projects: the bill ensures the completion and delivery of flats on time as stringent regulations are imposed on developers for any violations of the Appellate Tribunals or monetary penalties or both.
• Carpet area to be defined: The bill defines carpet area as net usable area of an apartment which means now a home buyer will be charged only for the carpet area. This comes as a huge relief to home buyers as developers now-a-days quote on super built up area or sellable area which is nearly 30-40% more than the usable area.
• Punish developers, real estate agents: as per a provision of The Bill, imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for any violation of orders of Appellate Tribunals or monetary penalties or both can be awarded. Besides, Misleading advertisements will be punishable offence where first-time offenders will be fined 10% of project cost and repeat offenders could face a jail term.
• All clearances before project launch: the Construction of a project can start only after getting statutory clearances. Prior to the launch of the project, developers will have to get all the clearances necessary to go ahead with the development.
• Part of home buyer’s money to be kept till project completion: A minimum of 70% collections from buyers should be deposited in separate escrow account to cover the cost of construction and land. The bill prohibits unaccounted money from being pumped into the sector; 70% of the money has to be deposited in bank accounts through cheques.
• Registration of projects with Regulatory Authority: The Bill provides for registration of all real estate projects with Regulatory Authorities to be set up, which will require developers to disclose project information as well as details of the promoter, project, lay-out plan, land status, status of approvals, and agreements along with details of real estate agents, contractors, architects and structural engineers.
• Developers to provide after sales services: The Bill has increased the period from 2 to 5 years for developers to be accountable for any structural defects arising within 5 years of project construction. Developers cannot change architectural plans without the consent of two-thirds of home buyers.
• Speedy redressal of complaints: Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days.
• Delays to attract interest: Both builders as well as home buyers will have to pay the same interest rate for any delays on their part.
• Insurance on land title: to benefit consumers in cases where the land titles are found to be defective, The Bill provides for an insurance of the land title.