A multi-department assessment of the Maharashtra government has found major ‘alterations’ in seven clauses of the State’s new housing regulatory rules submitted to Housing Minister Prakash Mehta on October 14, and the version which came back approved by him on December 1.
Contentious clauses
The report, submitted by senior officials from various departments, says that the clauses have been diluted to “favour” developers, and give them an escape route from penalties and scrutiny of the proposed Housing Regulator. The clauses include: Transfer clause under Section 17; Conveyance clause of Section 17; Total Disclosure clause under sections 34(1), 11(1) and 11(2); Registration Fee clause of section 4(1); Application fee section 4(2); Money Withdrawal clause (for new projects); and the Withdrawal clause (old projects) under sections 4(2)(l)(d).
Government departments were asked by the Housing Department to submit opinions on the newly framed Maharashtra Real Estate (Regulation and Development) (registration of real estate projects, registration of real estate agents, interest and disclosure on website) Rules, 2016.
In the original draft, the Transfer and Conveyance clauses had mandated conveyance of a building or a flat along with the land ownership to the consumer. “But the operative word ‘land’ has been obliterated in the final version. This means if a society gets ownership of a project from the builder it would be without land ownership,” a senior official of the Urban Development Department told The Hindu . “This is a setback to consumer rights.”
The original draft had put the onus of voluntary disclosure of information on the promoter, asking him to upload as many as 35 disclosures on the Housing Regulator’s website. In the version that came back from the Minister’s office, this number has been reduced to five, and even those disclosures are to be made on the project’s website, not the regulator’s.
‘Easing the grip’
Officials said the original draft had made it mandatory for promoters to maintain 70 per cent of the money collected from new sales to “existing home buyers” in a separate account. “The final draft has changed that to ‘future’ buyers,” officials said. “This is clearly easing the grip on the developer/builder.”
Mr. Mehta told The Hindu he was not available for comments until Friday because of prior engagements. However, his Officer on Special Duty Shrikant Pulkundwar said the criticism of the rules was unfair and that the government “had taken a practical approach”.
“There is no dilution in the final draft whatsoever,” he said. “If the clause had said the promoter should set aside 70 per cent of the money consumed on a project, it is practically not possible. Altering that is not dilution.”
Officials quoted more dilutions, though. The assessment has found a drastic reduction in the promoters’ registration fee, a move that will likely make the housing body financially weak, officials said. The original draft had asked that builders be charged Rs. 1 lakh per square metre for registering a project. The final draft, however, puts a cap of Rs 1 lakh as registration fee.
“The housing body will collapse if substantial amounts are not collected from builders,” an official from the Cooperatives Department told The Hindu . “Moreover, the fee to be charged from a consumer to register a complaint has been increased from Rs. 1,000 to Rs. 10,000. Both the Cooperatives and the Urban Development Departments will have to amend existing rules in line with the new housing regulations.”
The new rules have been framed under Section 84 of The Real Estate (Regulation and Development) Act, 2016. Sixty of these by-rules that cover four important aspects — registration of promoters/real estate agents, administrative machinery, authority/tribunals, and penalties and punishment — were cleared on December 1, senior officials said.
