In a big relief to home-buyers, who are often duped by fly-by-night realtors, the Union Cabinet on Tuesday cleared the Real Estate (Regulation and Development) Bill. It seeks to establish a regulator that will keep unscrupulous builders on a leash and provides for a jail term to developers who put out misleading advertisements about projects.
A brainchild of Housing and Urban Poverty Alleviation Minister Ajay Maken, the Bill seeks to create a uniform regulatory environment. It will allow builders or developers to sell their projects only after they receive all statutory clearances. Furthermore, developers can launch projects only after getting all statutory clearances. The Cabinet discussed the Bill at its April 2 meeting, but deferred it for further consultations.
The Bill seeks to make it mandatory for a developer to maintain a separate bank account for every project to ensure that the money raised for it is not diverted. It provides for a clear definition of the carpet area and prohibits developers from selling houses or flats on the basis of an ambiguous ‘super area.’ Developers will be barred from collecting money from buyers before receiving all permits to start construction.
All clearances will have to be submitted to the regulator and displayed on a website before construction begins. The measure lays out strict provisions to deter builders or developers from putting misleading advertisements by carrying photographs of an actual site. Failure on the part of a developer to comply with these rules will attract a penalty, which may be up to 10 per cent of the project cost. A repeat offence can land him in jail.
Developers will be required to keep aside 70 per cent or less — as decided by the competent authority — of the buyer’s funds in a separate account to ensure timely completion of projects. The buyers are entitled to full refund, with interest, in case of any delay in the completion of projects. Registration of projects with the regulatory authority is a must. They will not be allowed to take more than 10 per cent in advance payment without a written agreement with buyers.
