Over the next 8 years, every year an average of 8.5Lakh Apartments (Units) will be constructed across the 6 major Real Estate Markets in India.
Many of these new constructions will be Apartment Complexes with more than 1000 units. Current Owners of such large Complexes are well versed with the challenges that are inherent with such large projects. Few of them are:
A. Delay in Flat Handover.
B. Change in Construction Deliverables: Inside Unit features as well as Common Ameneties.
C. Lack of easily accessible information for Buyers to validate Property Documents & Clearance Documents.
D. After possession reluctance of Promoter towards complete conveyance of the Property to the Society formed by the Home Owners.
E. Lack of easy Grievance Redressal avenues.
With such future construction demanding substantial FDI, it is obvious that Robust Regulations are brought in place to address the above.
Towards this the proposed Real Estate Regulation and Development Bill, 2013 is a good start.
Introduced in Rajya Sabha last month, below are the 10 salient features of this Bill:
1. Standardization of Definitions. Introduces the Definitions of "Apartment", "Common Area", "Carpet Area", "Advertisement", "Real Estate Project", "Prospectus" etc.
2. Introduction of using only "Carpet Area" for sale, instead of ambiguities of "Built Up Area", "Super Built Up Area" etc.
3. Introduction of a Regulation and Enforcement authority called Real Estate Regulatory Authority. This Authority is similar to TRAI of Telecom and IRDA for Insurance. It provides specialized regulation and enforcement. It can impose penalties on Developers for violations including imprisonment upto 3 years.
4. Registration of Real Estate Agents, which outside few cities like Mumbai, is completely un-regulated. Real Estate Agents not to facilitate sale of Units not registered with the Real Estate Regulatory Authority. The Agents must maintain and preserve books of accounts, records and documents, facilitate the possession of documents to allottees as entitled at the time of booking etc.
5. Clarity on the Duties and Functions of the Promoter towards disclosure of all relevant information, adherence to approved plans, veracity of advertisement for sale or prospectus, rectify structural defects, and refund money in case of default.
6. Enforcing the Rights and Duties of Allottees: Right to obtain all information related to property booked, know stage-wise completion schedule, claim possession as per promoter declaration, claim refund with interest in case of Promoter default, after possession claim necessary documents and plans. Duty of the Allottees is to make necessary payments and any other responsibility per the Agreement.
7. Mandatory for Promoters to register all projects prior to sale. The registration is to happen AFTER receiving all approvals from Development/Municipal authorities.
Comment: This may prove to be a challenge. With the substantial delays in approvals, especially Environmental clearances, such mandate will prove to be a bottleneck.
8. Mandates the Public Disclosure of details related to the project: Details of the Promoter, Project, Layout Plan, Plan of Development Works, Land Status, Carpet Area , number of apartments booked, status of the statutory approvals, names and addresses of architect, contractor, structural engineer, real estate agents etc.
9. Mandates the Promoter to open a separate Bank Account for each Project and deposit 70% of the Amount received by him towards the Project in this Account. The Deposit percentage may change as notified by the Appropriate Government (state govt?)
10. The Authority will create Fast Track Dispute resolution mechanism, and a Real Estate Appellate Tribunal.
Do you think this Bill is sufficient to bring greater Accountability and Fair Practice in the Real Estate sector? What more needs to be done?