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India’s Real Estate Bill Passed

realestateThe much awaited the Real Estate (Regulation and Development) Bill, 2015 has been passed by the Rajya Sabha on March 10, 2016. The key points of the proposed bill which is going to benefit property buyers but impact consderably promoters, developers and real estate agents, are as follows:

Ø      The Bill requires setting up a new regulator for the real estate sector. As real estate comes under the purview of state governments, individual States are responsible for setting up the Regulatory Authority at the State level. State-level authorities, called Real Estate Regulatory Authorities (RERAs), will now regulate transactions related to both residential and commercial projects.

Ø    An authority will be created to help frame policies for the real estate sector. The regulator will also monitor compliance of rules on an ongoing basis as developers have to provide updates on progress and maintain a database on violators.

Ø    The specified residential real estate projects need to be registered with RERAs. Further, Promoters cannot book or offer these projects for sale without registering them. The regulator will maintain records of all projects and promoters.

Ø      It is mandatory for developers to register all projects larger than 500 sq mtr or, alternatively, more than 8 apartments, to be registered with the regulatory authority. Further, if the project is developed in phases, each phase must be registered separately.

Ø      The duly filed application should be submitted by the promoters/developers/real estate agents with the RERA for approval along with prescribed supporting documents like layout plan of the project; the carpet area of property for sale; the details of existing projects of the promoters; details of various approvals received by the promoters; details of land title on which the project is proposed and details about the payment dues on land title etc.,.

Ø     If the applicant does not hear back from the RERA within 15 days of the application for registration, the project will be considered as registered. However, RERA is empowered to revoke the approval by giving 30 days’ notice period.

Ø      Real estate agents dealing in these projects also need to register with RERAs. The registration is necessary to facilitate the sale or purchase of property in real estate projects that have been registered. Registered agents must not facilitate the sale of unregistered projects.

Ø     The regulation requires the buyers to pay consideration on purchase of house on carpet area basis (which clearly defines in the bill). Hitherto, it was payable on super built-up area basis.

Ø    In general the buyers faced the problem in the form of change in building plans including change in number of floors constructed after entering into an agreement with promoter. The Bill requires that builders take consent of 2/3rd of the home buyers in case of changes.

Ø     To mitigate developers from diverting funds to other projects, which will endup delaying completion of projects, the bill proposed that the 70% of the amount collected for the project by the buyers must deposit in a separate bank account.

Ø     In a cases where there are delays in completion, the developers/promoters will not pay any penalty or if pay it will be a low rate of interest as agreed between parties during execution of agreement. To avoid ambiguity/favour to one party, the bill is proposed that both parties have to pay the same rate of interest in case of delays in payment by buyer or hand-over by the developer.

Ø     The promoter shall :

  1. a) obtain a completion certificate from the relevant authority;
  2. b) form an association or society of buyers;
  3. c) provide essential services till the association of buyers take over the maintenance of the project.

If the promoter is unable to give possession of the property with agreed time, he shall be liable to return the amount received by him for the project along with interest.

Ø      In case the promoter fails to register the property, he may be penalized upto 10% of the estimated cost of the project. Failure to register despite orders issued by the RERA will lead to imprisonment for up to 3 years, and/or an additional fine of 10% of the estimated cost of the project. The promoter will have to pay upto 5% of the estimate cost of the project if he violates any other provisions of the Bill.

Ø      Real estate agents will have to pay a fine of Rs. 10,000/- for violating any provision of the Bill, for each day the violation continues.

About Kiran

One comment

  1. Thanks , Shri Naidu !
    A few days back , Parliament passed a bill to regulate the Real Estate Industry
    On 04 Nov 2015 ,I sent to Shri Venkaiah Naidu ( mvnaidu@sansad.nic.in ) , an email containing following suggestions
    Some of these have been incorporated in the new Act .
    Thank you , Shri Naidu for listening !
    ————————————————————————————————-
    E-Delivery of Services to Construction Industry

    Here is how :

    * All builders / developers must register on Municipal Web sites and obtain
    unique BUILDER REGISTRATION NUMBER

    * Builders must fill in online, on web site of concerned Municipality, a form :

    BUILDING PERMIT APPLICATION

    * Building Permit Application Form will have a STANDARD FORMAT , into
    which applicant will need to submit exhaustive details re the project

    This will include detailed Floor Plans and Structural Drawings , along with
    names / contact details of Architects / Structural Engineers etc

    The FORM will require slab-casting dates for each slab and the final
    completion date when builder will apply for Occupation Certificate

    * The Form will have a section called

    SELF CERTIFICATION / DECLARATION

    Builder would be required to tick YES / NO against each item as shown :

    Does your proposed Building / Structure / Project , satisfy the criteria /
    notifications / regulations , issued by the concerned Ministries in respect
    of :

    # Built-up Area……….. ( YES ) / ( NO )

    # Height Restriction

    # Fire Fighting

    # Water Harvesting

    # Roof-top Solar Power

    # Effluent Treatment

    # Garbage Disposal

    # Earthquake Resistant Structural Design…………..etc

    Clicking on each item will reveal the relevant ” Notification / Regulation ” issued by the concerned Ministry

    To make the process absolutely fool-proof , the form will insist on an ” Electronic Signature ” of the applicant

    DECLARATION / UNDERTAKING :

    ” I declare that I have read each and every notification / regulation , listed in respect of items mentioned above

    I further declare that I explicitly agree to abide by these regulations

    I am aware that Occupation Certificate will not be granted if my completed project is found to be in violation of any of these notifications / regulations

    I will not allow any person / entity to occupy any part of this premises , until and unless , Municipality issues to me , the Occupation Certificate

    If Municipality finds any violations , I agree to rectify the same before applying for a fresh Occupation Certificate

    If Municipality is not in a position to issue Occupation Certificate due to any
    violations which simply cannot be rectified , then I will demolish the said building / project / structure on my own and before such demolition , refund with interest , payments collected from the buyers

    The plot of land is free from any encumbrances / litigations

    I am not in default of any loans taken from any bank / individuals

    I will not accept any payment in cash , nor make cash payments

    I absolve the Municipal Corporation of any liability arising out of non completion of my project

    I agree that my Building Permit Application and my Registration Application details , be made accessible to public on your web site , along with full details of my past / current projects and full details of my balance sheet / bank borrowings ”

    GRANT OF APPROVALS BY MINISTRIES :

    As soon as the builder submits the online BUILDING PERMIT APPLICATION , it automatically and instantly , appears on the web sites of ALL the concerned Ministries

    The concerned officer of each Ministry , makes APPROVED / REJECTED entries in the application form , from the backend

    If rejected , he will provide the reasons

    Ministry officers are required to carry out this entry , within 24 hours

    As soon as an officer of any Ministry makes entry and SUBMITS , the application forms on web sites of ALL Ministries and web site of the concerned Municipality , get updated simultaneously and instantly , making for MIRROR IMAGES at all times

    As soon as any entry is made , a copy gets emailed to the applicant builder

    Any ” editing ” of the application form by the builder , will start the entire process , all over

    Applicant builder will be obliged to display the latest emailed form at the site

    The database so created on web sites of ALL Ministries – and concerned Municipality – will be searchable State-wise / City-wise

    CHANGES IN RELEVANT LAWS :

    To speed up any litigation between the parties concerned ( Builder / Buyers / Central & State Govts / Municipality / Bankers etc ) , existing laws may be changed

    IMPORTANT :

    Every application must be in the open domain and visible to anyone , online and transparently

    There should be provision for any visitor of the web site to report any abuse / violation of regulations or any objection to the proposed construction

    ADVANTAGES :

    If such SELF CERTIFICATION process is implemented , it should be possible for India to beat Singapore , where getting 11 approval takes only 26 days !

    It would be ZERO days in our case !

    Now couple this with abolition of Corporate Income Tax for Construction Industry for the next 10 years and witness a MIRACLE

    ————————————————————————————-

    hemenparekh.in / blogs
    15 March 2016

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