The Real Estate Bill, pending before Parliament since August 2013, is all set to get Parliament’s approval after the Congress indicated its support for the legislation.
The government also accepted as many as 20 amendments to the bill as proposed by a Rajya Sabha Select Committee in a bid to secure the Congress’ support. The bill is touted as a key reform measure in the vast real estate sector.
The Bill, slated for passage in Rajya Sabha on Thursday, aims to protect property buyers’ interest from unscrupulous realtors and regulate the real estate sector. The bill’s passage in Lok Sabha would be a cake walk for the government as it enjoys majority in the Lower House.
Realty stocks rose up to 7% on Wednesday in anticipation of the passage of the Real Estate Bill.
Although the Congress was the original architect of the bill, it could not be passed as it found no support from the BJP and some other parties during the UPA era.
On Wednesday, a senior Congress leader told HT, “We will support it. It would be passed.” Earlier this month, the law had found support from Congress vice president Rahul Gandhi.
The cabinet amended an earlier clause to make it mandatory for developers to deposit 70% of the money collected from buyer in a separate escrow account to meet the construction cost of a particular project. Earlier, the ceiling was at 50%. “This would check developers from diverting funds to other projects and ensure speedy completion of project for which money has been collected,” said a housing ministry official.
The bill, covering both residential and commercial real estate, proposes to set up a real estate regulatory authority (RERA) where developers will have to compulsorily register and disclose project details before launching it. Violation will lead to penalty of up to 10% of the project cost or three years imprisonment.
In another “pro- consumer” move, the cabinet decided that rate of interest payable by the promoter or the allottee in case of default and delays will be the same. Also a developer’s liability to repair structural defects in the sold property has been increased to five years from the earlier two years. . Promoters have also been barred from changing plans and design without consent of consumers.
However, succumbing to the builders lobby that has been protesting against some provisions, the cabinet in a first has introduced a new penal provision for allottees for failure to comply with orders of RERA. Allottees would have to cough up to 5% of the apartment cost or a year in jail or both for defaulting on payment or any other violation on their part.
The bill had become a political hot potato after Congress vice president Rahul Gandhi attacked the Centre during the monsoon session last year and charged it with diluting various provisions that harmed the interest of middle-class homebuyers.