These changes are based on the recommendations of a Rajya Sabha committee that examined the Bill pending in the upper house of Parliament.
Under the amendments, projects on at least 500 sq metres of area or with eight flats will have to be registered with the proposed regulatory authority, instead of the minimum size of 1,000 sq metres suggested earlier, bringing a larger number of projects under the regulator's ambit.
Builders will have to deposit at least 70% of the sale proceeds, including land cost, in an escrow account to meet construction cost, compared with the earlier proposal for 50% or less, and pay interest to home buyers for any default or delays at the same rate they charge them. Builders will be liable for structural defects for five years, instead of two years earlier.
Carpet area has been clearly defined under the new proposals to include usable spaces like kitchen and toilets. Garage will be kept out of the purview of definition of apartment. Formation of residents' association is compulsory within three months of the allotment of a majority of units in a project.
The Bill seeks to allow aggrieved buyers to approach consumer courts at the district level, instead of only the real estate regulatory authorities proposed to be set up under the Bill. The regulatory bodies will mostly come up in state capitals.
The government had made a few changes to the Bill earlier in December 2014. It had brought commercial real estate projects under the ambit of the Bill, made the provisions of the Bill applicable to all projects wherein sales are still in progress and put in place a system that would require consent of twothirds of the buyers in a project for changing project plans.
Getamber Anand, national president of the Confederation of Real Estate Developers' Associations of India (CREDAI), said while builders welcome the changes, the Bill should not be retrospective in nature as it would lead to a lot of confusion and delays. Commercial real estate should be kept out of the ambit of the regulator, he said.
"Also, they still have not included sanctioning authorities in the Bill. So where do we go if there is a delay in getting approvals such as plinth certificates, occupancy certificate, electricity and water connections, even after the project has taken off. Without these permissions, even a completed project cannot be offered for possession to home buyers," Anand said. These issues, he said, should be addressed so that they do not become a pain point for the industry.
Anuj Puri, chairman and country head at property consultancy JLL India, said the Bill will bring more transparency and accountability into the sector, which will in turn help reduce the cost of capital. This will be good for both developers and buyers, Puri said.
"However, it needs to be ensured that it (the proposed regulator) does not become one more approval authority as we already have several of them," he said. "To begin with, we could have started with large projects and then brought smaller ones under its ambit, as it will be too much of volume to handle at a time when we are starting with it." The revised Bill includes an enabling provision for arranging insurance of land title, which is currently not available. This will benefit buyers and sellers in situations where the title of the land is held invalid.
The regulatory authorities will promote a single-window system of clearances for real estate projects. This will likely speed up construction work that now lags because of delays in getting permissions.
Regulatory authorities can grade projects along with grading of promoters, besides ensuring digitisation of land records. They will be required to make regulations within three months of the formation of the regulator as against six months proposed earlier.
States will have to make rules within six months of notification of the proposed Act as against the one year proposed earlier. Allottees shall take possession of houses in two months of issuance of occupancy certificate.
Under the new proposals, additional benches of appellate tribunals can be set up in a state if required for speedy adjudication of grievances.
A new provision has been created for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of the appellate tribunals or monetary penalties, or both.
Under the proposals, tribunals will have to adjudicate cases in 60 days as against 90 days proposed earlier. Regulatory authorities will have to dispose of complaints within 60 days. No such time limit was indicated earlier.
Source: economictimes.indiatimes.com
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