Real Estate Industry is expected to touch 120 billion USD in 2020 and FDI is expected to increase to 25 billion USD from present 4 billion USD. The share of the Industry to national GDP is expected to increase from 6.3% in 2013 to 13% in 2028. The Real Estate Industry is the second largest employer and provides direct and indirect employment to 35 million people specially low and medium skilled. Right from small contractors/estate agents to big industrial houses like Tatas, Godrej and Mahendrasall entered Real Estate industry. But still the industry remained unregulated and as a result there has been uncontrolled growth resulting in hard ship to all specially the customers.
In an unregulated environment, the customer is hit the hardest amongst all the players. The Average Indians’ dream is to have `ROTI KAPTA AUR MAKAAN’. Roti and Kapada are easily manageable in most of the cases, but as far as Makaan is concerned for majority of the population it still remains a dream to be fulfilled with great efforts. The experience of purchasing a house remains a nightmarish experience to most of the customer due to
In the light of the above the proposed Real Estate (Regulation and Development) Bill 2013 and its proposed Amendment (hereinafter referred to as the Bill) is a welcome step towards disciplining the real estate sector and all the players involved.
The Bill is a pioneering initiative to protect the interests of the consumers, promote fair play in the real estate transactions and to ensure timely execution of the projects. The Bill provides for a uniform regulatory environment to protect consumer interests, ensure orderly growth of the real estate sector and speedy adjudication of disputes.
The Bill provides for establishing one or more RERAs in each state/UT or one authority for two states to act as nodal agency to coordinate efforts regarding development of the real estate sector and to render necessary advice to Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector. Along with establishment of RERA some of the mandatory obligations put on the Real estate companies shall prove to be customer friendly.
The real estate companies have tomandatory get the real estate project registered with RERA and obtain a registration number. If project is to be developed in phases, each phase is to be registered and separate registration number is to be obtained. No sale of real estate units should be effected till the project is registered and all details about the project are uploaded on the site of RERA. Apart from real estate companiesreal estate agents who intend to sell any plot, apartment or building shall also get themselves registered with RERA.
After obtaining the registration number from RERA all the details regarding the project need to be uploaded on the website of the RERA viz., details of promoters, details of the project, layout plans, plan of development works,land status, status of statutory approvals, Proforma agreements, number and carpet area of the apartments for sale in the project, names and addresses of real estate agents, contractors, architects and structural engineers associated with the project. The promoter shall post quarterly updates on status of project. Promoter shall not accept more than 10% of the cost of the apartment/plot as advance without entering into written agreement.
In order to ensure that the amount collected from the customers are deployed in the projected and not diverted to other projects, it is provided that 50%, or such lesser percent as notified by the appropriate government, of the amounts realized for the real estate project from all the allottees should kept deposited in a separate account in a schedule bank within a period of 15 days to cover the costs of construction to be used for that project only.
No promoter is allowed to alter plans, structural designs and specifications of the plot, apartment or building without the consent of 2/3rdallottees after disclosure. Nonetheless minor additions or alterations permissible due to architectural and structural reasons
In order to address the perpetual, perennial and long drawn litigation the Bill provides for Fast track dispute resolution through Adjudicating Officers (District judges). It also provides for establishment of Real Estate Appellate Tribunal to hear appeals from orders of the RERA and the adjudicating officer.
To bring the required discipline in the real estate sector the Bill provides for steep penalties for various offences committed by Real estate companies ranging from 5% to 10% of the of the estimated cost of the real estate project as determined by RERA. If the promoter indulges in unfair practice RERA can revoke the registration granted and may recommend the competent Authority to facilitate the balance of the development works to be carried out by association of allottees or in any other manner.
Apart from the monitory penalties, where an offence under this Bill has been committed by a company, and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Duties and obligations of the Allottees The customer friendly Bill has many provisions which give a great opportunity to the prospective customers to know all the details regarding the project in which the customers wants to invest. With so much information made available to make informed decision if the customer do not exercise due diligence before making investment in any real estate project, then they will surely be hit by Caveat Emptor (buyers beware). An obligation is also put on the allottees to make payment as per the schedule agreed with the promoters and for non-compliance with any provisions of the Bill, penalty can be levied on an allottee which may extend upto 5% of the cost of the flat/plot booked by him.
When the Bill becomes a reality and the Authority enforces all the provisions in all seriousness, it will bring a sea change in the way the real estate business is conducted in the country. This Bill can be expected to bring the required discipline and cleansing effect. This Bill will to Real Estate what SEBI has been for the capital markets. It will for surely weed out the fly by night operators, consolidation happen and ultimately only those who are serious, systematic and professional and believe in delivering qualitative product within the agree time frame shall survive.
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