The Real Estate (Regulation and Development) Bill 2013 has finally been cleared by the Cabinet and is now headed for Parliament. But will it help aggrieved home buyers take on erring builders?
While the Bill seeks to put an end to fraudulent practices and unfulfilled promises made by developers, has a dispute resolution mechanism in place to look into any residential property related issues buyers may have with regard to delays or if the apartment is not delivered as per specifications, it does not cover commercial realty projects or projects that have been developed in plots less than 1,000 square metres.
One of the objectives of the Bill is to ensure that developers obtain all clearances before they advertise their projects. Builders developing projects using land in excess of 1,000 square metres will have to register with the regulatory authority and declare building plans, area of the flat, date of delivery etc. They will also have to declare this information in advertisements of their project. Any misleading advertisement by a developer, with representative pictures and not actual ones, will be a punishable offence. Failure to do so for the first time would attract a penalty which may be up to 10% of the project cost and a repeat offence could land the developer in jail.
It also has a provision wherein it is clearly stated that developers will have to sell an apartment on the basis of the carpet area and not the super area. The Bill seeks to define carpet area and standardise it across the country. This, effectively, is the area you will get for your end use. Super area, which includes common spaces such as lobby and parks and is often used to mislead owners — will now be made virtually non-existent.
The word ‘promoter’ has now been defined in the Bill to include not only private players but also government agencies which build houses such as the Delhi Development Authority, National Building Construction Company and Housing and Urban Development Corporation. Both private developers and government agencies will have to get the project registered with the regulator.
The Bill also mandates a compulsory deposit by the developer of 70% of the project cost in a designated separate bank account or an escrow account. This is to make sure that the amount collected from the allottees is utilised only towards the particular project and not for acquiring new land parcels. There is also a provision for return of money to the customer with interest in case of delay.
By seeking to establish the Regulatory Authority and the Appellate Tribunal, the Bill aims to create a dispute resolution mechanism and provide a specialised forum for hearing disputes related to property matters. This is a move to address the grievances of the consumer who otherwise had to endure either a prolonged litigation process in a court of law or consumer courts. The Bill proposes to set a real estate appellate tribunal, headed by a sitting or a retired judge, for adjudicating disputes.
While the provisions in the Bill seek to address the concerns of buyers, implementing these provisions will be a big challenge. It will require tremendous political will and a sense of obligation towards the primary stakeholders, the buyers — otherwise it is will simply remain an Act in the book.