A Must Know For All S.S.B. Apirants The Real Estate Bill Protecting the home buyer
A Preview of the Real Estate Bill
The Rajya Sabha has passed the much awaited Real Estate Bill, by coming out of the sharp political contention that have stalled a large number of legislative activity in the House. Over the course of five years, the Bill has through several rounds of talks and there are a large number of changes that have been brought to its original form before it passed the test. Once enacted, it would in totality give homebuyers enough faith in the less inhibited by the “buyer beware” caution in a sector largely known for not honouring or going by the terms of deals mostly leading to its breach. An industry reckons suggests that about ten lakh home buyers invest every year in buying a house. According to The Minister of Housing and Urban Poverty Alleviation M. Venkaiah Naidu, a total of 76,044 companies are intricate into the real estate sector. It is estimated they contribute about a total of 9 per cent of GDP (gross domestic product). He also mentioned it to the the House that a total of 17,526 projects were passed on between 2011 and 2015 with an investment value of about Rs.13.70 lakh crore. The sheer magnitude of these numbers demands that this sector be run on completely fair and transparent lines, taking into view both the need to encourage fair play and encourage liquity. Given the deep seated political divide in the Parliament, it is was encouraging to see that parties have risen above the narrow deep seated political divide and to let a very important pro-consumer bill to be passed through.
Beyond just being a disciplinary law it also controls the unplanned functioning and the presence of fraudulent operators in the real-estate sector, the Bill will also try to bring in a sense of safety and feeling of comfort to the homebuyers. Necessary registration of any project up the size of 500 square metres in size or involves eight apartments, a different guarantee account to park the funds, will lead to greater accuracy in the definition of carpet area, a stronger penalty norms for structural defects in the cases of construction, a sure shot agreement clause for changes in any of the construction plans and other such victuals will go a long way in helping encouraging consumer confidence.
Here are five ways how the bill will protect home buyers:
1) All the Residential and Commercial Projects that include eight flats or cover an area of about 500 square meters or more, will now have to be registered with the Real Estate Regulator. This pretty much covers most real estate being built in the cities of India. No project will be allowed to be sold to the buyer, unless it has all necessary permissions from local authorities to start construction.
2) Buyer-seller or builder-buyer agreements are extremely lopsided, offering almost no rights or protection to the home buyer today. Once the bill becomes an Act, one-sided agreements will become a thing of the past. Any delay in payment by the builder will attract the same penalty as what the buyer needs to cough up, if his payment is delayed. Builders who are notorious for changing project plans, midway, including the number of floors in a building or the layout of a flat, will now be barred from doing so, without the approval of 2/3rd of the buyers.
3) Realty projects often get delayed because developers divert funds meant for one project to another. But once the bill becomes law, real estate developers will have to deposit at least 70 per cent of money collected from buyers in an escrow account to meet construction costs. This will ensure that developers who run out of cash don’t stall projects.
4) Developers cannot sell property on the basis of super area (flat area plus common area). They will have to clearly define the carpet area which includes spaces like kitchen and toilets. So a buyer will know exactly what is he getting as living area and the price he’s paying for it.
5) What’s more, developers are also banned from making claims in advertisements or publishing pictures of site/project which are untrue. Misleading advertising has been made punishable. For flouting any of rules laid out in the Regulator Act, the developer can be fined 10 per cent of the total project cost. And for repeated offense, the builder can also be jailed.