Real Estate Bill Passed – A BIG Relief to Home Buyers

The Real Estate (Regulation and Development) Bill, 2015, which embodies protection of buyers and to bring more transparency to the Real Estate sector finally, was passed in Rajya Sabha on Thursday (10-March-2016).

There are 2 main features of this bill as enunciated above:

• Protection of Buyer’s interest
• Bringing more transparency to the Real Estate sector

Now, let’s have a look at the key points of the Real Estate Bill and how it is going to impact the consumers, Real Estate companies and the Indian Economy.

      A.  Organise the Real Estate Sector

As of now the real-estate sector in India works in an unorganised fashion which has led to innumerable discrepancies. Now with the new bill, state level authorities will be established.

These authorities will be known as Real Estate Regulatory Authorities (RERA) and will be responsible for regulating the transactions related to both residential and commercial projects.

Every project measuring more than 500 square metres or more than eight apartments will have to be registered with the RERA.

The RERA will also do the grading of projects which will help consumers in better decision making.

Further, in case of dispute, the parties in dispute to approach RERA for redressal of grievances. Resolution of disputes has to be completed within a stipulated time of 60 days.

     B.  Project completion and hand-over & Appropriate punishment for delay in projects

Timely project completion and handover has been a very controversial topic since long as the real-estate developers does not handover/give possession of the property to the buyers as per the time frame agreed and documented at the time of booking of the property.

Currently, a developer does not have to suffer any financial losses if the project is delayed. Now, the law ensures that delay in project completion will make the developer liable to pay the same interest, as the EMI being paid by the customer to the bank, to the buyer.

The new bill ensures that 70% of the money collected from buyers has to be kept in an escrow account. The amount deposited in the escrow account could be utilized for land cost and cost of construction of the related project only for which amount has been collected. Now the developers will not be able to use the amount collected from buyers of one project for the development or construction of another project, hence the timely handover of the property would be ensured.

     C.  More Accurate Information Sharing

The real-estate companies has to mandatorily disclose all information like the project layout, all approvals, land status, contractors, project time schedule with the customers and also with RERA.

Now, the developer/promoters cannot make any changes to the plan without consent of the buyers.

The Bill also makes the selling of property inclusive super built-up area as illegal activity. Bill has provided definition of the carpet area and going forward property prices would be charged based only on the carpet area which the buyer will be getting on purchasing the property.

     D.  After-sales service

Now it’s mandatory to set-up an owner’s association within 3 months of the allotment of major units of the property so that the residents can manage common facilities among themselves.

If a buyer finds any structural deficiency in the property, then the buyer could approach the developer for after-sales service within one year of getting the possession.