The Centre is in the final lap to approve a legislation that aims to shield property buyers from unscrupulous developers and regulate the real estate sector to increase transparency and boost investor confidence in an otherwise murky industry.
The housing and urban poverty alleviation ministry has tweaked the draft Real Estate (Regulation & Development) Bill, to allow buyers to approach consumer forums— and not just the proposed real estate regulator— in case of disputes, a change that reflects the Union cabinet’s attempt to empower consumers, government sources told HT.
The ministry, piloting the crucial legislation that covers both residential and commercial real estate, has modified and sent the revised bill to the cabinet, which is expected to clear it soon, said sources.
The cabinet had in December deferred a decision on the bill following opposition from several ministers, who felt it was unfair that buyers would only have the option to lodge complaints with real estate watchdogs at the state and national levels.
“The provision would have caused lot of hardship to consumers in small towns and districts who would have been deprived of any other avenue for redressal,” said a government official.
Sources said the original bill barred buyers from knocking on the doors of any other consumer forum to do away with the multiplicity of litigation.
The bill also allows builders to divert 50 % of the amount collected from a buyer for a specific project to launch other ventures.
The primary bill drafted by the UPA government mandated that a developer put 70% of the amount collected for a project from the allottees to an escrow account to be used only for construction under that particular scheme.
The clause was aimed at discouraging realtors from diverting consumers’ money to launch fresh projects before delivering the ones for which the funds were collected. The real estate lobby was pushing hard for dilution of this provision, sources said.
The bill proposes that builders developing a project where the land parcel exceeds 1,000 square metres will have to register themselves with the regulator before launching or even advertising their venture. Failure to do so will invite a fine of up to 10% of the total project cost.
While the UPA bill covered only the residential real estate segment, the NDA has expanded its purview to cover commercial properties as well.
In the works since 2009, the bill was introduced in the Rajya Sabha by the UPA government on August 14, 2013 and referred to the parliamentary standing committee on urban development. The committee gave its recommendations many of which have been incorporated by the housing ministry, sources said.