5 Reasons to smile for buyers under the Real Estate Bill
Reasons to smile for buyers under the Real Estate Bill
Buying a house earlier used to be quite a tedious process for the buyers. The new real estate bill has brought about reasons to cheer for them as it has made the buyers more accountable for various things thus ensuring the protection of buyers interests. Here are five of them:
Regulation for Real Estate
Under the new Real Estate Bill, each state and union territory within the country should help set up regulatory bodies with an aim to resolve real estate disputes. All large home and office projects as well as the brokers selling them will have to be registered with these proposed regulatory bodies.
According to data from PropEquity, in cities such as New Delhi, Mumbai and Bangalore there are around 1 million apartments that were due to be completed between 2012-2015 but remain unfinished. With this Bill, the grievances of large number of home buyers who didn’t have much legal recourse will be addressed.
Safeguarding of Buyers’ Money
Traditionally, developers in India used to take money for buyers before the completion of property and use the same for reasons other than the construction such as buying additional land. However, with the dip in sales of homes the developers are experiencing a financial crunch to complete their projects on time, sold years ago to buyers.
Under the new bill, the builders have to keep aside 70% of the money collected in a dedicated bank account with the sole purpose of utilizing the money for the said project. However, the bill has a caveat whereby the states have the authority to bring it down from 70%.
Equality in penalties for delays
The Bill states that “both builders and buyers will have to pay the same rate of interest in case of any delay on each other’s part.” Earlier, upon delay of a project, the buyers had to pay a penalty as much as 18% a year if they were late in paying their installments to the builder while the builders had to pay less than 10% a year for any delays.
Payment to be made as per Carpet Area
As per the new Bill, builders can only sell homes as per carpet areas, which has been defined as the area in which buyers in finally live, and not super built up areas that required them to pay a part for the construction of common areas such as lobby, stairs etc.
Builders to get approvals
Earlier, certain builders gained notoriety for initiating projects without getting the pre-requisite approvals for projects which in most cases never came at all. As per Crisil, the new Bill “seeks to protect interests of buyers by incorporating a clause that projects can be launched only after the developer secures all statutory clearances from relevant authorities.”
