New Delhi, March 10: The real estate bill, proposing a real estate regulator designed to protect property buyers' interests against unscrupulous promoters, was passed by India's upper house on Thursday after the government accepted as many as 20 amendments to the legislation as proposed by a Rajya Sabha Select Committee.
The Real Estate Regulator (Regulation and Development) Bill, pending before parliament since 2013, proposes major reform of the country's largely unregulated realty sector. Once it becomes law, the consumer will have access to a Real Estate Regulatory Authority for redressal in case of a grievance.
The bill will make it mandatory for all commercial and residential real estate projects where the land is over 500 square metres, or eight apartments, to register with the regulator for launching a project, in order to provide greater transparency in project-marketing and execution.
For failure to register, it proposes a pelty of up to 10 percent of the project cost or three years' imprisonment.
By one of the amendments proposed, the project developer will have to put 70 percent of the money collected from a buyer in a separate account to meet the construction cost of the project.
A major benefit for consumers proposed is that builders will have to quote prices based on carpet area and not super built-up area, while carpet area has been clearly defined in the bill to include usable spaces like kitchen and toilets.
The bill has also introduced a new pel provision for allottees for failure to comply with orders of the regulator. Allottees would be pelised up to 5 percent of the apartment cost or a year in jail, or both, for defaulting on payment or any other violation.
"This bill is the need of the hour," Urban Development Minister M. Venkaiah idu said while replying to the debate on it.
"It provides for grading of projects, grading of promoters, pelises for giving misleading advertisements," the minister said.
"By creating a much-needed regulator for the sector at the state and central levels, this government has initiated the crucial first step to protect consumers from the prevalent opaque and fraudulent practices that have so far characterised this sector in India," said independent member Rajeev Chandrasekhar, who was also member of the Select Committee that examined the bill.
"This bill ensures that strict regulations will be imposed on developers to ensure timely construction and delivery. It further provides that consumers are entitled to a full refund with interest, if there has been a long delay in the delivery of a flat," he added.
"It is a first step and it will improve," said former union minister Praful Patel of the NCP participating in the debate.
Complimenting the government for satisfying the long-pending demand for a real estate regulator, Ritabrata Banerjee of the CPI-M said the mass of small housing excluded by the paramters of the bill should also be brought within its ambit.