New Delhi: Homebuyers struggling with inordinate project delays, poor construction quality and others whims of builders will heave a huge sigh of relief. The Rajya Sabha has cleared the the Real Estate (Regulation and Development) Bill after it was introduced by the government in the Upper House today.
The bill, which seeks to protect the interest of buyers and also bring transparency to the real estate sector in India, was first introduced by the erstwhile UPA government in 2013 and the government has brought to the floor of the parliament after some amendments.
Here, we bring you five ways that the new legislation will benefit homebuyers:
Setting up of a regulatory authority
The real estate sector, unorganised so far, has been functioning largely unregulated where buyers are often left at the whims of the developer. The bill seeks to fix this by proposing to set up state-level Real Estate Regulatory Authorities (RERAs) which will regulate transactions related to both residential and commercial projects. The authority will also grade projects in order to facilitate more informed decisions for buyers.
Tackling delayed possession woes
Delayed possession of flats has been the single biggest problem for buyers in today’s market. Builders rarely stick to possession dates and the penalties promised in the Builder-Buyer Agreements on account of delays in construction. Want of funds is also cited as one of the reasons behind delays. The bill mandates builders to keep aside 70 per cent of the money received from buyers in a separate account. This amount can only be used for the project that the money has been paid to the builder. Often, builders deploy the funds received for one project into another.
Making builders accountable
Builders offering delayed possession of projects, sometimes running into years, can no longer shirk accountability. The new bill mandates builders to shell out an equal payment of interest for delayed possessions as compared to the interest it charges buyers on account of delayed payments. Currently, builders pay only 2-3 per cent interest in case of default and delays, while the buyer has to shell out anywhere between 15-18 per cent for defaults. The bill increases the time period a developer can be held accountable for structural defects to 5 years from the existing two year timeframe.
Transparency in information
The builder can no longer take buyers for a ride by promising a particular area and delivering something much lesser. The developers have for long exploited the concept of ‘super area’ to mislead customers. The bill seeks to set this right by disallowing sale of a property on the basis of ‘super area’ which includes both flat area and common area. Violation of this norm can lead to a three-year term for the developer.
More power to the buyer
Contrary to the current practice, the new bill makes it compulsory for developers or builders to muster the consent of two-thirds of the buyers to bring about any changes to the original plan. Builders often resort to tweaking the construction and layout plan of a particular society without the knowledge of buyers. Introduction or modification of any new element in a project which is different from what was shown to the buyer at the time (new tower, school, temple etc) of booking will not be allowed without the consent from two-thirds of the buyers’.