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Updated: June 6, 2013 12:45 IST

Housing Ministry unveils Model Real Estate Regulation Act

    A. Srivathsan
    K. T. Jagannathan
Comment (6)   ·   print   ·   T  T  
TIME FOR TRANSPARENCY: A draft model law by the Union Ministry of Housing and Urban Affairs provides for greater transparency in dealing with housing properties. File photo of housing complexes and IT malls under construction in Chennai.
The Hindu TIME FOR TRANSPARENCY: A draft model law by the Union Ministry of Housing and Urban Affairs provides for greater transparency in dealing with housing properties. File photo of housing complexes and IT malls under construction in Chennai.

No buildings or townships meant for sale, in the near future, can be undertaken without registering them with the Real Estate Regulatory Authority to be set up in each State. The Ministry of Housing and Urban Poverty Alleviation has published the draft Model Real Estate (Regulation of Development) Act to control and promote construction, sale, transfer and management of colonies, residential buildings, apartments and other similar properties through a regulatory authority.

This draft Act has been published for soliciting stake holders’ opinion and the Ministry expects the State governments to pass their respective Acts, based on this model Act, after it is finalised.

The Model Act makes it mandatory for all promoters to submit the details of the approved plans of projects along with a bank guarantee equivalent to five per cent of the estimated cost of the development to the regulatory authority. In addition, the promoter will also give an undertaking to complete the work in accordance with the conditions of registration. After verifying the authenticity of the approved plan, the title of the property and other relevant details, the authority will register the project. The details of the projects will be made public through the authority’s web site.

This registration will be valid for three years and has to be renewed after that.

When violations of rules, failure to provide essential services to the developed plots are noticed or complained about, the registration will be cancelled after due verification. The bank guarantee provided will be forfeited and the names of the promoters will be included in the defaulters list and published in the authority’s website. Failure to comply with the rules of the Act will attract imprisonment for a term which may extend to three years or a penalty which will be computed in terms of percentage cost of development.

The model Act also prevents the promoters from advertising the project before it is registered with the authority. If the information contained in the advertisement or the prospectus is found untrue and causes loss or damage to the buyer, the promoter will be asked to compensate for the loss.

The model act also provides for appeal and setting up of appellate tribunal.

Suggestions to improve the draft Act have to reach the Ministry (dir_hsg_mud@nic.in or us-housing.muepa@nic.in) by November 6, 2009.

Development up to 1,000 sq. m. exempted

Even as the draft model Real Estate (Regulation of Development) Act has laid out elaborate rules for development of colonies and construction of apartments, it has exempted development of land up to 1,000 square metres from mandatory registration with the proposed regulatory authority. According to the draft, “no such registration shall be required, when the area of land proposed to be developed into a colony does not exceed 1,000 square metres or the number of apartments proposed to be constructed does not exceed four”.

This exemption is seen as a move primarily to help land development for own-use. The draft has clearly elaborated the role, responsibility and obligations of promoters who undertake land development. It has made it mandatory for a promoter who develops a real estate project to make available for inspection all documents and information to any person who is intending to take a plot/building/apartment in the project.

It has also prohibited real estate promoters from soliciting buyers through ads or taking advance/deposits without first registering with the proposed regulatory authority. Any such ads post-registration with the regulatory authority should contain all details, including the cost payable. It also makes it mandatory for a promoter to record all details vis-À-vis the project for which registration has been obtained on the website of the regulator within 15 days from the date of receiving the password from the regulatory authority through a system of self-entry.

According to the draft, the proposed regulatory authority will have a chairperson and two members. They will have three-year tenure. It will have powers to call for information and conduct investigation, among others. It will help evolve consensus on structural safety norms, facilitate the establishment of a framework for speedy processing and grant of all relevant permissions and promote the rating of real estate projects. The draft also provides for setting up an appellate tribunal.

frm SATISH.P.V.Sr.ECONOMIST
Ex Head Of Eco Section CIDCO ltd

A Dream come true..
A small step in Right Direction..
In fact this ill boost the Demand from Middle class Hsg demand,who are very scare of Pvt builders..
No a days Pvt builders are more transparent than Govt Agencies,due to great competition among Builders in Mega Cities..
these Regulatory bodies shall be seperate for EACH STATE..and sopecial for MEGA CITIES like MUMBAI'
thanks,.

from:  satish.p.v
Posted on: May 2, 2010 at 13:03 IST

This is a remarkable 'thought-achievement' of the state government,though it has been long over-due. I hope, in the final version,they will make the act as transparent as possible to rule out its misuse.

from:  Senthil Rajan
Posted on: Nov 16, 2009 at 18:16 IST

Developers should keep money collected from buyers as installments in escrow account so that that same money cannot be used for buying further lands by developers and risking completion of project in case market slow down as it has happened recently.

from:  Ashish
Posted on: Sep 27, 2009 at 08:55 IST

It is a good move to regulate the construction company's activities. It will prevent them from cheating the customer and at the same time safeguard the interest of the customers. My main request is that the Regulatory Board should not allow the Construction Companies to go against the Building Act, such as:
a) To give proper open spaces in the layouts (10% of the total area),
b) to provide adequate road widths,
c) if the site has more than 300 houses, the basic requirement of Space for Post Office, Medical Center at the Builder's cost.
d) Provision of Rain water Harvesting system,
e) Under ground drainage system

from:  R Lakshminarayanan
Posted on: Sep 26, 2009 at 16:45 IST

The intent of the Bill is good. The only pitfalls are : Clean Implementation, all across the country, with various authorites in place, it is the misuse of the existing laws, which is more prevalent. How will the Government ensure that the person responsible for implementing this law will not work hand in gloves with the said builders? Existing illegal colonies sprouting in all the cities are prime examples of authorities having a hand-in-glove role with the builders, and land mafia.

from:  Vishal
Posted on: Sep 26, 2009 at 10:58 IST

Why cannot we have a system, wherein people can only buy and sell to and from a legal agency, Say Housing Exchange Board. If I want to sell, I can only sell to the Housing Exchange through an e-Auction and if I need to buy, I can only buy from the Housing Bank through an e-auction with any speculation with sealings and deposit moneys. This will bring additional revenue to the government in the form of higher stamp fees, since the cash component will be eliminated, thus discouraging flow of black money into real estate.

from:  S.V. Satyanarayana
Posted on: Sep 26, 2009 at 08:44 IST
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