In a bid to create more consumer friendly, transparent and accountable real estate sector, Union Cabinet has approved the Real Estate (Regulation and Development) Bill, 2015 which is applicable both for commercial and residential real estate projects.
- The bill is an initiative to protect the interest of consumers, promote fair play in real estate transactions and to ensure timely execution of projects.
Provisions of Real Estate (Regulation and Development) Bill, 2015
- Creation of Regulator – Establishment of “Real Estate Regulatory Authority” (RERA) in States/UTs to regulate real estate transactions.
- Registration – Real estate projects and real estate agents must be registered with the Authority.
- Disclosure – Mandatory disclosure of all registered projects including details of the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer etc.
- Construction Cost – Compulsory for builders to deposit 70% of the amount raised from buyers into an escrow account in a scheduled bank within a period of 15 days to cover the construction cost of the project for timely completion of the project.
- Dispute Resolution – Establishment of fast track dispute resolution mechanisms for settlement of disputes through adjudicating officers and Appellate Tribunal.
- Equal Rate of Interest – Inclusion of equal rate of interest to be paid by the promoters and buyers in case of default or delays. Currently it is in the favour of builder.
- Prohibition on civil courts – Civil courts jurisdiction prohibited from taking up matters defined in Bill, however, consumer court allowed to hear real estate matters.
- Consumer consent must – Promoters barred from changing plans and design without consent of consumers.
- Punishment – Proposed jail term of up to 3 years or penalty or both in case of builders
Benefits of Real Estate (Regulation and Development) Bill, 2015
Bill will boost domestic and foreign investment in the Real Estate sector and help achieve the objective of Government of India to provide “Housing for All” by enhanced private participation.
- It aims at restoring confidence of consumers in the real estate sector by institutionalizing transparency and accountability in real estate and housing transactions which will further enable the sector to access capital and financial markets.
The Bill will now be taken up for consideration and passing by the Parliament.