The Real Estate (Regulation and Development)
Bill, 2016, became an act on May 1, kick-starting the process of making
rules as well as putting in place institutional infrastructure to
protect the interests of home buyers in India.
While acknowledging that the act is a positive
development, property experts said the new rules should address problems
faced by builders in getting sanctions and approvals in a timely
manner. "Government authorities should also be made accountable for time
bound approvals through the rules that will be made," said Anshuman
Magazine, managing director of property advisory firm CBRE South Asia.
He said that if this happens, it will be one of
the major steps towards the recovery of the Indian real estate market
and will improve the confidence of both consumers and institutional
investors - domestic or foreign. "Of course, it should not become
another hurdle for development, which will then raise property prices in
the long term," said Magazine.
The Ministry of Housing & Urban Poverty
Alleviation notified 69 of the act's 92 sections that come into force
from May 1. Rules for implementing the provisions of the act have to be
formulated by the central and state governments within six months - by
October 31 - the maximum period stipulated in Section 84 of the act.
The housing ministry will make the rules for Union
Territories while the Ministry of Urban Development will do so for
Delhi. The key to providing succour to home buyers will be the setting
up of Real Estate Regulatory Authorities, which will require all
projects to be registered, and the formation of Appellate Tribunals to
adjudicate disputes.
According to Section 20 of the act, state
governments have to establish the regulatory authorities within one year
of the law coming into force. These authorities will decide on the
complaints of buyers and developers in 60 days. The act seeks to protect
the rights of home buyers, mandates registration of projects, including
those that have not got completion or occupancy certificates.
Registration will require builders to set aside
70% of the funds collected from buyers and pay interest in case of
delays. Any officer, preferably the secretary of the department dealing
with housing, can be appointed as the interim regulatory authority.
Once the regulators are set up, they
will get three months to formulate regulations concerning their
functioning. Real Estate Appellate Tribunals need to be formed within a
year - by April 30, 2017. These fast-track tribunals will decide on
disputes over orders of the regulators within 60 days.
A committee chaired by the secretary of the housing
ministry has started work on formulation of model rules so that states
and UTs can frame their rules quickly, besides ensuring uniformity
across the country. The ministry will also will come out with model
regulations for the regulatory authorities.
The remaining sections of the act that have to be
notified relate to aspects such as the functions and duties of
promoters, rights and duties of allottees, prior registration of real
estate projects with the regulatory authorities, recovery of interest on
penalties, enforcement of orders, offences, penalties and adjudication.
Considering that there 12 months left for the
regulatory authorities to be set up by the states, builders are expected
to speed up work to avoid the stringent provisions of the new real
estate regulatory act.
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