The government unveiled pro-consumer draft real estate rules on Friday that stipulate timely compensation for project delays and a stringent anti-discrimination clause, aiming to shield millions of home buyers from unscrupulous practices in a largely unregulated industry.
The proposed rules under the Real Estate (Regulation and Development) Act, 2016, set a 45-day deadline for the promoter to refund the home buyer, along with applicable interest and compensation, in case of any delays.
The draft rules — which spell out how a law will be implemented –bar builders from discriminating on any grounds. “Discrimination on the basis of religion, vegetarianism or non-vegetarianism and even sexual orientation will be prohibited,” officials said.
Under the rules, both the promoter and buyer will have to pay compensation in case of delay or default of payment, respectively.
The rate of interest will be 2% higher than the State Bank of India’s benchmark interest rate, which is used by the bank to formulate lending rates.
The legislation is aimed at cleaning up India’s real-estate sector where delays of several years in hand-over and overshooting of project costs are common in the absence of a central regulator. The bill was passed by Parliament in March.
The new law proposes a central regulator to oversee the industry. Builders with projects bigger than 500 square metre will have to register themselves before advertising. They will also have to provide information under 60 different heads to ensure home buyers don’t get duped by fly-by-night developers, the draft rules said.
The housing ministry sought suggestions in two weeks. States are free to make changes in the central rule but the urban development ministry will notify the guidelines for Delhi.
The draft guidelines say all builders will pay a registration fee of Rs 10 per square metre if the plot area is below 1000 sq m and Rs 20 if more than 1000 sq m. For commercial projects, the fee is between Rs 50 and Rs 100 per sq m.
The draft rules also mandate that developers and real estate agents may escape jail for non registration of projects or violating appellate tribunal orders if they pay 10% of the estimated project cost as fine. Similar provisions have been kept for buyers.