Read Estate Bill 2015

Key Points

• Real estate contributes nine per cent to the national GDP and the Bill’s passage was seen as crucial to ensuring better regulatory oversight and orderly growth in the industry.
• Previously, in the absence of a regulatory authority, real estate deals were largely done on faith or based on the experience of friends and family.  
• Buyers will now be paying only for the carpet area and not the super built-up area which was fraught with confusion earlier.
• The developers will now have to take consent of 66 per cent of the homebuyers in case they have to increase the number of floors or change the building plans. This will protect the buyers from any ad-hoc changes that are a norm presently.
• If builders still cause delays in transferring properties to buyers, the appellate tribunal would intervene and slap fines on them within 60 days. In a worst case scenario, the tribunals can send a developer found guilty of fraud to jail for three years.
• The builders would also be responsible for fixing structural defects for five years after transferring the property to a buyer. 
• In case consumers fail to make payments to developers, the appellate tribunal can fine them, too.  

 How it will benefit consumer?

• A total of 17,526 projects were launched between 2011 and 2015 with an investment value of Rs.13.70 lakh crore. According to Minister of Housing and Urban Poverty Alleviation M. Venkaiah Naidu, a total of 76,044 companies are involved in the real estate sector. The sheer scale of these numbers demands that this sector be run on transparent lines, taking into consideration both the need to foster fair play and encourage equity. 
• Beyond just being a disciplinary legislation that regulates the haphazard functioning and the presence of unscrupulous operators in the real-estate business, the Bill will also bring in a sense of comfort and feeling of security to homebuyers.
• Compulsory registration of any project of the size of 500 square metres in size or involves eight apartments, a separate escrow account to park collections, greater clarity in the definition of carpet area, a tighter penalty norm for structural defects in construction, a mandatory consent clause for changes in construction plans and other such provisions will go a long way in boosting consumer confidence.
• Read in tandem with the stringent disclosure norms and penalty provisions, including imprisonment, in some cases, for delays and other contractual failures on the part of a builder, this legislation is a necessary and desirable means to clean up the real estate sector.
• It is hoped that the legislation will improve the trust quotient, which has been identified as a key factor hurting the credibility of the sector that serves the role of a multiplier in a growing economy. If that happens, it would go a long way in strengthening the overall demand sentiment. A better regulatory environment could also inject a sense of clarity in the operation of the industry, and facilitate prospective investors to look at it as a huge opportunity.