Press Information Bureau
Government of India
Ministry of Housing and Urban Poverty Alleviation
14-August-2013 14:44 IST
Real Estate (Regulation
and Development) Bill, 2013 Introduced in Rajya Sabha
The Real Estate (Regulation and Development)
Bill, 2013, as approved by the Union Cabinet in its meeting on 4th June 2013,
was introduced in the Rajya Sabha today . The Bill has been
piloted by Dr. (Ms) Girija Vyas, Minister of Housing and Urban Poverty Alleviation
. Soon after its introduction, the Bill was referred to the Parliamentary
Standing Committee on Urban Development for review and making suggestions.
The Bill provides for a uniform regulatory
environment, to protect consumer interests, help speedy adjudication of
disputes and ensure orderly growth of the real estate sector and has been much
awaited by all aspiring home buyers.
The Real Estate (Regulation and Development)
Bill, 2013 is a pioneering initiative to protect the interest of consumers, to
promote fair play in real estate transactions and to ensure timely execution of
projects.
The Bill has been prepared by the Government
after extensive consultations with States, experts and stakeholders. The Bill
has been supported by the States along with Ministry of Consumer Affairs, the
Competition Commission and Tariff Commission among others.
The Bill is being proposed under Entries 6, 7
and 46 of the Concurrent List of the Constitution of India, which deals with
Transfer of Property, Registration of Deeds and Documents, and Contracts.
It contains elaborate provisions to bring in the
much needed transparency in real estate dealings through provisions for
registration of real estate projects and real estate agents with the Real
Estate Regulatory Authority; functions and duties of promoters and agents;
rights and duties of allottees etc., The Bill once enacted
will lead to establishment of Real Estate Regulatory Authority and Real
Estate Appellate Tribunal in every State for registration of all
real estate projects and for speedier dispute resolution. Stringent
penalties have been sought to be imposed on habitual offenders. This it is
believed will act as a deterrent for those few erring builders who bring bad
name to the developer community at large.
Currently, the real estate and housing sector is
largely unregulated and opaque, with consumers often unable to procure complete
information, or enforce accountability against builders and developers in the
absence of effective regulation. The Bill is expected to ensure greater
accountability towards consumers, and to significantly reduce frauds and
delays. The Bill aims at restoring confidence of the general public in the real
estate sector; by instituting transparency and accountability in real estate
and housing transactions which in turn will enable the sector to access capital
and financial markets essential for its long term growth.
The Bill is also expected to promote regulated
and orderly growth through efficiency, professionalism and standardization. It
seeks to ensure consumer protection, without adding another stage in the
procedure for sanctions.
Benefits
and Advantages of Real Estate Bill, 2013
· The
Bill will bring about standardization in the sector leading to
healthy and orderly growth of the industry through introduction of
definitions such as ‘apartment’, ‘common areas’, ‘carpet area’,
‘advertisement’, ‘real estate project’, ‘prospectus’ etc. Introduction
of the concept of using only ‘carpet area’ for sale which has till now been
ambiguously sold as super area, super built up area etc., will curb unfair
trade practices.
· The
Bill like other sectors such as telecom, electricity, banking,
securities, insurance etc. provides for specialized regulation and enforcement which
includes both curative and preventive measures, with powers to enforce specific
performance, not available under the consumer laws. The Authority has powers to
give directions for specific performance powers to impose penalty for
non-registration of projects including imprisonment for continuous violation upto 3
yrs and impose penalty in case of other contraventions.
· The
Bill proposes to register real estate agents which have
hitherto been un-regulated, with clear responsibilities and functions, thereby
leading to money trail and curbing money laundering.
· The
Bill aims to ensure consumer protection, by making it mandatory for
promoters to register all projects, prior to sale; and only after having
received all approvals from development/municipal authorities thereby
protecting buyer investments.
· The
Bill will promote transparency and fair and ethical business practices,
relating to transactions, through disclosure of project details and contractual
obligations vis-à-vis the project and the buyer, promoting informed
choice for the buyers. This will substantially reduce the power
asymmetry prevalent in real estate transactions.
· The
Bill seeks to establish a regulatory oversight mechanism, through
Real Estate Authority(s) and Appellate Tribunal in the States, to enforce
accountability norms for the promoter buyer and the real estate agents.
· The
Bill will infuse professionalism and promote planned development of
the real estate sector through the promotional role of the Regulatory
Authority.
· The
Bill will ensure timely completion of projects, and prevent fund
diversion.
· The
Bill provides for a speedy and specialized adjudication mechanism to
settle disputes between the promoter, buyer and real estate agents,
thereby de-clogging the civil courts and consumer forums, from disputes in the
real estate sector.
· The
Bill will catalyze domestic and foreign investment into the sector,
thereby contributing to enhanced activity, and increase in GDP growth.
The salient features of the draft Bill are as
under:
§ Applicability of the Bill:
The proposed Bill applies to residential real
estate i.e. housing and any other independent use ancillary to housing. However
it shall not apply where the area of land proposed to be developed does not
exceed 1000 square meters or the number of apartments proposed to be developed
does not exceed 12, inclusive of all phases, or an area or number of apartments
as notified by the Central Government on recommendations from the appropriate
Government, which may be different for different States or Union territories
but not more than 1000 square meters or 12 apartments.
§ Important Definitions:
The Bill will bring about standardization in the
sector leading to healthy and orderly growth of the industry through
introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet area’,
‘advertisement’, ‘real estate project’, ‘prospectus’ etc. Introduction of the
concept of using only ‘carpet area’ for sale, which has till now been
ambiguously sold as super area, super built up area etc., will curb unfair
trade practices.
§ Establishment of Real Estate Regulatory
Authority:
Establishment of one or more ‘Real Estate
Regulatory Authority’ in each State/UT, or one Authority for two or more
States/UT, by the Appropriate Government, with specified functions, powers, and
responsibilities to exercise oversight of real estate transactions, to appoint
adjudicating officers to settle disputes between parties, and to impose penalty
and interest;
§ Registration of Real Estate Projects and
Registration of Real Estate Agents:
Mandatory registration of real estate projects
and real estate agents who intend to sell any immovable property, with the Real
Estate Regulatory Authority on real time basis without adding another layer of
approvals.
§ Mandatory Public Disclosure of all project
details:
Mandatory public disclosure norms for all
registered projects, including details of the promoters, project, layout plan,
plan of development works, land status, carpet area and number of the
apartments booked, status of the statutory approvals and disclosure of proforma agreements,
names and addresses of the real estate agents, contractors, architect,
structural engineer etc.;
§ Functions and Duties of Promoter:
Duty of promoters towards disclosure of all
relevant information and adherence to approved plans and project
specifications, obligations regarding veracity of the advertisement for sale or
prospectus, responsibility to rectify structural defects, and to refund moneys
in cases of default;
§ Compulsory deposit of seventy percent or such
lesser percent as notified by the Appropriate Government, to cover the
construction cost of the project, of funds received by the Promoter, in a
separate bank account:
§ Functions of Real Estate Agents:
Real estate agents not to facilitate the sale of
immovable property which are not registered with the Authority required under
the provisions of the Act, obligation to keep, maintain and preserve books of
accounts, records and documents, obligation to not involve in any unfair trade
practices, obligation to facilitate the possession of documents to allottees as
entitled at the time of booking, and to comply with such other functions as
specified by Rules made in that regard;
§ Rights and Duties of Allottees:
Right to obtain information relating to the
property booked, to know stage-wise time schedule of project completion, claim
possession of the apartment or plot or building as per promoter declaration,
refund with interest in case of default by the promoter, and after possession
entitled to necessary documents and plans. Duty of allottees to make
necessary payments and carry out other responsibilities as per the agreement;
§ Promotional role of Real Estate Regulatory
Authority:
The Authority to act as the nodal agency to
co-ordinate efforts regarding development of the real estate sector and render
necessary advice to the appropriate Government to ensure the growth and
promotion of a transparent, efficient and competitive real estate sector;
§ Fast Track Dispute Settlement Mechanism:
Establishment of fast track dispute resolution
mechanisms for settlement of disputes, through adjudicating officers (an
officer not below the rank of Joint Secretary to the State Government) to be appointed
by the Authority, and establishment of an Appellate Tribunal to hear appeals
from the orders of the Authority and the adjudicating officer;
§ Establishment of Central Advisory Council:
Establishment of Central Advisory Council to
advise the Central Government on matters concerning implementation of the Act,
with a mandate to make recommendations on major questions of policy, protection
of consumer interest and to foster growth and development of the real estate
sector. The Council to have among others, five representatives of State
Governments, to be selected by rotation;
§ Establishment of Real Estate Appellate Tribunal:
Establishment of Real Estate Appellate Tribunal,
by the State Government to hear appeals from the orders or decisions or
directions of the Authority and the adjudicating officer. The
Appellate Tribunal is to be headed by a sitting or retired Judge of the High
Court with one judicial and one administrative/technical member;
§ Punitive Provisions:
Punitive provisions for non registration of a
real estate housing project - Penalty which may extend up to 10%
of the estimated cost of the real estate project as determined by the Authority
.
For continued violation or non-compliance of
order for registration - punishment with
imprisonment for a term which may extend up to three years or with fine which
may extend to a further 10% of the estimated cost of the real estate project,
or with both as determined by the Authority .
For knowingly providing false information or
willful contravention at the time of applying for registration and
for other contraventions under the law – A penalty which may extend up to 5% of the
estimated cost of the real estate project as determined by the Authority.
