Thursday, 11 August 2016

Easing Path for Home-Buyers: Rajya Sabha Passes Real Estate Bill

Intended to bring transparency and accountability in the real estate sector, the recent approval of the much-awaited Real Estate Bill by Rajya Sabha, has pushed the bill towards becoming a law. The amended bill is primarily projected to protect the interests of home buyers by facilitating timely completion of project sand has been perceived as a major reform measure to regulate the hitherto-opaque real estate sector. Reports also say that this can encourage the flow of FDI funds into the market.

 Important highlights in the amended bill are:-

·         Now, all projects-both residential and commercial-that cover eight flats or have 500 square metre or above, have to be registered with Real Estate Regulator. Without the local authorities’ permission, no property can be sold to the buyer for commencing any construction.

·         The buyer-seller and builder-seller agreements, which have been asymmetrical till date, will get a revival by the new bill. Builders usually change the design layouts, number of floors etc., according to their convenience and whims and fancies. But, by this bill, this case will become a matter of past, as any delay in payment by the builders, has the potential to attract penalty. Moreover, in case of any alteration in building plan, there is a need of the approval from 2/3rd of buyers.

·         Real estate sector is notorious for diverting funds, which are collected from the buyers. Developers usually park this fund for some other projects, which eventually stalls the projects for which the money is deposited. But, the new bill demands the builders to deposit at least 70% of the money collected from the buyers to an escrow account, for meeting construction costs.

·         A non-discriminatory clause is likely to end the partiality on the basis of religion, region, caste, creed, and gender. This has been taken into the foreground as a result of some discriminatory practices by some section of sellers towards certain communities.

·         Now, developers have to vividly define the carpet area, which includes kitchen and toilet space, unlike the older custom of showing the super area. This gives an idea to the buyers regarding the actual living area. Furthermore, developers are required to give the entire information about the projects of last five years, both completed and ongoing. 
 Many builders used to put wrong images of the project for advertisement. But, the new bill puts a clip on this tendency by imposing fine of 10 percent of the total project cost. As misleading advertisements have become punishable, repeated offence can land up the builder in jail also.

Hence, with the approval of the new bill, the realty sector is expected to see green shoots by a positive growth towards a square of much larger transparency and accountability, which, in effect, helps in curbing the issue of black money.

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