The Rajya Sabha passed a landmark Real Estate Bill on Thursday with a promise to secure the interests of homebuyers and developers in equal measure and remove corruption and inefficiency from the sector.
The Bill, which was amended to reflect the “views and suggestions of various stakeholders and political parties,” according to Minister for Parliamentary Affairs and Urban Development Venkaiah Naidu, won approval from legislators across the political spectrum, a rare sight as the last two parliamentary sessions had ended in a whitewash.
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.
“The whole country is waiting for this Bill,” Congress leader Kumari Selja said. She said people had been falling prey to unfair practices in the absence of a regulatory mechanism.
The first draft was rejected last year by the Rajya Sabha, with Opposition leaders saying it favoured developers and did not serve the interests of consumers.
After incorporating 20 amendments, Mr. Naidu said the Bill now sought to make “the consumer the king” and will also “encourage developers in an atmosphere of mutual trust and confidence.”
Compared to the previous version of the Bill, in which constructions below the size of 1,000 square metres or 12 apartments were left out of the accountability ambit, the new Bill has reduced the size and exempts projects only below 500 square meters.
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.
Sanjay Dutt, Managing Director, India, at the real estate services firm Cushman & Wakefield, said one of the significant aspects of the Bill was the definition of “carpet area”. “Buyers will now be paying only for the carpet area and not the super built-up area which was fraught with confusion earlier,” he said. “Also, 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.”
Highlighting the role of the RERA, the accountability agency, Mr. Naidu said: “It brings in only regulation and not strangulation. This Bill is not against anyone… The Real Estate Bill will renew investors’ confidence and ensure timely completion of projects and create more opportunities. In this way, it will help in achieving the target of ‘Housing For All’,” he said.
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.
Rajeev Chandrasekhar, an independent MP, who played a key role in drafting The Real Estate (Regulation and Development) Bill, 2015 said: “By creating a much-needed regulator for the sector at the State and Central levels, this government has initiated the crucial first step to protect consumers from the prevalent opaque and fraudulent practices that have so far characterised this sector in India.”