Six years after it was conceptualised, the union cabinet on Tuesday cleared the proposal to set up a real estate regulatory authority (RERA), which will give much-needed shield to property buyers against unscrupulous real estate developers and agents.
The Real Estate (Regulation and Development) bill is being piloted by the housing and urban poverty alleviation (HUPA) ministry and covers both residential and commercial real estate. The bill makes it mandatory for builders developing a project exceeding 1,000 square metre to register with RERA before launching or even advertising a housing scheme.
However, in a dilution from the original bill drafted by the previous UPA government, the NDA has allowed builders to divert 50%, instead of 70%, of the amount collected from a buyer for a specific project to launch other projects. The real estate lobby was pushing hard for dilution of this provision, sources said.
Developers will have to disclose all information such as the layout plan, project’s time schedule, status of statutory approvals to RERA, failing which they will be penalised 10% of the project cost. For subsequent violation, they will be charged another 10% of the project cost or face a three-year jail term. Registration can also be cancelled in case of persistent violation.
In case of dispute or grievance, besides RERA, buyers can also knock the doors of any other consumer forums. In case the buyer is not satisfied with RERA’s decision they could approach the appellate tribunal.
“Happy that Cabinet approved amendments to Real Estate Bill. It will be taken up in forthcoming session of Parliament,” HUPA minister Venkaiah Naidu tweeted.
The bill will go a long way in checking money laundering in the sector as it makes it mandatory for developers and property agents to register. If the regulator demands, then they will also have to submit a record of their accounts.
Even government agencies which build houses for sale, such as DDA and NBCC, will have to register with RERA. Any deviation from the agreement or layout plan would tantamount to violation, an official said.