After 20 key amendments, cabinet clears real estate bill

The Union cabinet on Wednesday cleared 20 key amendments to the Real Estate (Regulation and Development) Bill with a view to safeguarding property buyers’ interests from unscrupulous realtors by regu-lating the sector while provid-ing for penal measures against defaulting customers, too.

In a slew of “pro-consumer” measures, the cabinet chaired by Prime Minister Narendra Modi amended an earlier clause in the billwhichwillmake it mandatory for developersto deposit 70% of the money collected from buyers in a separate escrow account to meet the project’s construction cost

“This would check develop-ers from diverting funds to other projects and ensure speedy com-pletion of the project for which money has been collected,” a housing ministry official said.

The bill that will now be taken up for consideration and pas-sage by Parliament will cover both residential and commercial real estate. It proposes to set up a real estate regulatory authority (RERA)where developers will have to compulsorily register and dis-close project details before launch.

In another move, the cabi-net decided the 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.  

However, considering a demand by builders who had been protesting that the bill was stacked against them, the
cabinet, in a first, introduced a new penalprovision for allottees on failure to comply with RERA orders. Allottees will have to pay up to 5% of the apartment cost or face a year in jail or both for defaulting on payment or any other violation on their part.

The bill had become a political hotpotato afterCongnsssvice-pres-ident Rahul Gandhi attacked the government during Parliament’s monsoon session and charged it with diluting various provisions that harmed the interests of mid-dle-class home buyers.

HIGHLIGHTS OF PROPOSED LAW
■ All commercial and residen-tial real estate projects where the land exceeds 500 sqmt or have eight apartments most register with the regulator. The earlier threshold was 1,000 sqmt or 12 apartments

■ Developer will have to put 70% of the money collected from a buyer in a separate account to meet the con-struction cost of the project. The earlier bill had fixed the ceiling at 50% or less
■ The rate of interest payable by the promoter or the allot-tee, in case of default and delays, will be the same

■ Developer’s liability to repair structural defects has been increased to 5 years from the earlier 2 years

■ New provision for imprison-ment up to 3 years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders.

source : hindustan times