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"The Real Estate (Regulation and Development) Bill" in the offing

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murali772 - 1 April, 2013 | Real Estate | urban development | India | Group Housing | KAOA | CREDAI | KOFA | apartments

Undeterred by stiff opposition from private developers and builders, the housing ministry is pushing hard to bring the real estate regulator bill, aiming to protect home buyers, in the current session of Parliament. Housing minister Ajay Maken on Sunday said the bill was expected to be brought up for consideration of the Cabinet soon before being introduced in Parliament.

A real estate regulator in every state will ensure that private developers get all projects registered before sale of property and after getting all necessary clearances addressing a major concern of buyers about incomplete or fraudulent land acquisition and pending clearances.

- - - The bill has proposed that private developers and builders would not advertise or start a housing project before getting all necessary clearances and reporting before a real estate regulator. The developers cannot collect any money from buyers before completing all necessary permits to start construction on the project.

- - - The developers will have to maintain a separate bank account for a particular project and will not be allowed to divert the money for other projects.

- - - Before launching a project, developers will have to submit all necessary clearances to the regulator which will be displayed on the regulator's website. Failure to do so for the first time would attract a penalty which may be up to 10% of the project cost; a repeat offence could land the developer in jail, Maken said.

The Real Estate (Regulation and Development) Bill, which seeks to provide a uniform regulatory environment to the sector, was opposed by private developers in totality but the ministry has stuck to it, saying the basic tenet of the legislation is based on voluntary disclosure which will infuse transparency.

- - - As per the legislation, realty players will have to voluntarily disclose project details, including carpet area and open space and contractual obligations on the regulator's website to ensure transparent, fair and ethical business practices. The regulator will act only if there is complaint of any deviation from the project details disclosed by a developer on the regulator's website. Under the bill, there will be a model builder-buyer agreement which is expected to reduce ambiguities in real estate transactions that not many buyers are familiar with. Real estate agents will also be asked to register with the regulator. Agents, an important link between the promoter and buyer, have been an unregulated lot till now. Once they are registered, it will be help in curbing money laundering.

For the full text of the article in the ToI, click here

While interacting with the Dept of Town Planning, GoK, in the matter of updation of the KAOA (Karnataka Apartment Ownership Act), and KOFA (check this), we were contacted by Mr Amit Jain, Director General, Federation of Apartment Owners Association (as well as his colleagues, all based in Delhi), an apex All India body to protect the interests of Group Housing Societies. They have apparently been actively pursuing the Model Real Estate Regulatory Bill with the Ministry of Housing and Poverty Alleviation, from quite some time, and have advised the Hon’ble Minister and its Secretariat on various aspects of this bill.

Our group comprising Sanjay Vijayaraghavan, Ajit Naik, and I are now interacting with them on a regular basis in pursuit of our common interests.

PS: Incidentally, the Federation was linked up to me by noe less than Ms Nisha Singh, Councillor, Ward 30, Municipal Corporation of Gurgaon. She perhaps is the kind of representative that we should be electing.

Muralidhar Rao

 

COMMENTS

some movement, finally

murali772 - 23 February, 2015 - 14:06

SC today expressed displeasure over the delay by the government in setting up of a real estate regulator to keep a check on the activities of realtors. "How many more years will it take," a bench of Chief Justice H L Dattu and Justice A K Sikri asked when the counsel appearing for the Union Urban Development Ministry said it was in the process of drafting the Real Estate (Regulation & Development) Bill. The observation came during the hearing of a PIL on unethical practices by real estate developers, including misleading advertisements by builders. The bench, while adjourning the hearing, said the bill has been pending since long. During the brief hearing, Additional Solicitor General N K Kaul told the court that the cabinet had considered the issue on December 17 last year and a new cabinet note is now being drafted. He then sought six weeks' time to inform the court about developments on the issue, which the court granted. 
 
For the full text of the report in the Business Standard, click here.
 
Well, at least it's beginning to move finally. But, for the Act to be passed, and, more importantly, for Karnataka to adopt it and bring it into effect, I expect, it's stiil going to be a long haul. 
 

cabinet approval accorded to bill

murali772 - 8 April, 2015 - 13:56

The Union Cabinet has approved the Real Estate Development and Regulation Bill along with certain key amendments that will make way for setting up of a regulator for the sector. The Bill and a uniform regulatory mechanism across the country are aimed at protecting property buyers' interest by bringing in much-needed transparency and accountability into the sector. Through the amendments, the Cabinet has extended the applicability of the Bill to commercial Real Estate also. Ongoing projects that have not received Completion Certificates so far have also been brought under the purview of the Bill and these projects need to be registered with the Regulator within 3 months, the Union government said in a release. - - - - Developers are expected to register their projects and disclose all relevant information including schedule of development works, land status, status of statutory approvals, pro-forma agreements, names and addresses of real estate agents, contractors and architects with the Regulatory Authorities to be set up and comply with the same. Builders will now not be able to divert funds of their projects as they will have to deposit 50% of funds collected from buyers within 15 days in a separate bank account to meet construction costs. This provision of 50% has been made after taking into account the cost of land needed to be acquired before announcing a project. Under the other new stipulations approved by the Cabinet, States will have to make rules within a year, rank of adjudicating officer has been elevated to that of District Judge, web based online system for submitting applications for registration of projects to be introduced within one year of the establishment of Regulatory Authorities and Regulator has to decide cases within 60 days. 
 
For the full text of the report in the Economic Times, click here. 
 
Looks good, overall - I'll await Sanjay V's comments, before sending out an official letter to govt requesting early implementation.
 

submission made to the Rajya Sabha Committee

murali772 - 15 June, 2015 - 10:32

The following is the text of the mail sent pursuant to the hearings held on the 11th June, In Bangalore:

The Honorable Chairman,
Select Committee of Rajya Sabha on the Real Estate (Regulation & Development) Bill, 2013,
New Delhi

Respected Sir

At the outset, let me thank you for the opportunity given for making my submissions at yesterday's hearings.

My focus has largely been on the following deficiencies in the Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972 (otherwise called Act no 16 OF 1973, or KOFA), and Karnataka Apartment Ownership Act 1972 (otherwise called Act no 17 of 1973, or KAOA), largely from the consumer (buyer)'s point of view:

1) not providing for registration as a simple "association" of buyers, but instead stipulating registration as a Co-operative society or a Company, both of which are not the best suited to the purpose;

2) not identifying and empowering the "competent authority";

3) not clearly outlining the application of the Act and Rules thereunder to staggered developments, particularly those having common assets (like STP) and commercial set-ups like shopping malls, IT parks, marriage/ meeting halls, serviced apartments, etc;

4) not making it mandatory for all multi-storied apartment complexes to be submitted to the provisions of the two Acts;

5) not providing for application of the KAOA by the association, where the promoter has failed to submit a complex to the provisions of the Acts.

On taking up the matter with the state government authorities, they have been stating that they would like to await the passing of the Real Estate Act, by the centre, it supposedly expected to cover all these aspects too, or perhaps enable doing so.

There have been extensive debates on these matters on our blog group (PRAJA), all of which can be accessed @ http://praja.in/hi/node/4448, one of which has recorded 349 comments, clearly highlighting the concern of the home buyers on the lack of clarity on these matters.

As a lay person, as far as law is concerned, I am not quite sure if the new bill draft has covered all of these matters. As such, I would now request you to apply your expertise on the subject to incorporate the necessary provisions to address the deficiencies, in the overall interest of the large sections of home buyers.

Thanking you,
very truly yours,
sd/- Muralidhar Rao
(President, Praja-RAAG)

Copy of the above was also sent to Sri Anil Kumar, IAS, Secretary, UD, GoK, CREDAI, and others.

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