Home buyers can soon hope to get possession of new flats on time as the housing ministry has accepted a parliamentary panel’s recommendation on the real estate bill that bars developers from diverting more than 50% of money collected from a buyer to other projects.
The ministry has also agreed to the panel’s recommendation to empower state governments to make the provisions stricter and increase the 50% threshold but not lower it. The original bill had allowed states to lower the limit.
Sources said in a move to ensure smooth sailing of the Real Estate (Regulation and Development) Bill in Parliament, the housing and urban poverty alleviation ministry has accepted all 38 recommendations made by the 21-member Rajya Sabha select committee which submitted its report last week.
“The ministry will move the cabinet shortly to get the changes approved. The bill will now come up in the winter session of Parliament,” a source said.
Among the other accepted recommendations is a provision that all housing projects on more than 500 sq mt would have to register with the proposed real estate regulator. The original bill fixed that threshold at 1,000 sq mt. Also, the interest rate payable by the promoter or allottee in case of any default by either would be the same.
Realty experts said the bill would protect buyers’ interests and encourage investment.
“It will go a long way in protecting buyers’ interests. However, the government will have to ensure that the process for obtaining project approvals is streamlined so that developers do not face undue delays,” Anshuman Magazine, chairman and MD of CBRE South Asia, said.
The bill pending since 2009 covers both residential and commercial real estate and proposes setting up of a real estate regulator to which developers would have to disclose all information such as layout plan, time schedule, status of statutory approvals, etc.
Failure to do so would lead to a penalty of 10% of the project cost. For subsequent violations, they will be charged another 10% of the project cost or sentenced to a three-year jail term.