It will be sent to the Union Cabinet for approval soon
Property developers will no longer be able to lure buyers with advertisements making tall claims and with blown-up pictures of fancy living spaces. In fact they will no longer be able to publicise their projects unless they have all the requisite permissions for construction, the Real Estate (Regulation & Development) Bill-2011 has proposed.
The Bill, which will be sent to the Union Cabinet for approval soon by the Union Ministry of Housing & Poverty Alleviation, has spelt out the specifics that will have to be followed by the construction industry.
HUPA Minister Ajay Maken is keen to table the Bill in the Budget session of Parliament, pointing out its efficacy in protecting consumer interests.
The Bill will make it mandatory for property developers to first get approvals like building sanctions, environment and civil aviation clearances before they set out to announce their projects and get the buyers to sign up, said Mr. Maken. The move will stem the prevalent practice of “misleading” the consumers and will bind the builders to deliver what is promised.
Builders will be required to make voluntary disclosures on the website of the regulatory authority that will be set up in each State, once the Bill is passed. Deviations from the disclosures will not be allowed, for instance the floor area or the time for completion of the project that will be disclosed on the regulator’s website will have to be adhered to.
“The Bill has also defined what comprises open spaces and what makes for a common area space. There are ambiguities in what makes for a carpet area of an apartment, and the Bill has tried to remove those. The builders will be required to give an outer limit of the completion date, if on account of extraneous reasons they need more time, they will have to seek extra time from the regulator,” Mr. Maken said.
On the lopsided existing penalty clauses, whereby consumers are imposed harsher fines than the builders for defaults, the Minister said, that anomaly too is being rectified. “There is going to be stringent punishment for defaulters, including a jail term,” the Minister said.
Elucidating on the people-friendly aspects of the Bill, the Minister said it proposes that 70 per cent of the money collected for a specific project will have to be maintained in a separate account and the builders will not be able to divert funds from an on going project to start a new one.
“We are keen that there is enough money for the completion of the [ongoing ] project and the funds should not be diverted at the cost of the current project. The Bill has also proposed that the agreements between buyers and sellers will also be vetted by the regulator, because the consumers are not able to make sense of the fine print and do not always have the option of legal opinion,” he said.