Real Estate Regulator Bill 2016: 5 Things For Home Buyers To Look For

5 Reforms For Everyone To Know

1. Centralised Office for any grievances against any builder

This real estate bill has introduced the idea of establishing State Real Estate Regulatory Authority one stop place for all real estate queries and complaints against any builder. This will happen once every state ratifies this Act and establishes a state authority on the lines set up in the law. 

2. Regulation of Customers Money 

According to the Real Estate Regulator Bill 2016, the developer is obliged to park 70% of the project funds in a dedicated bank account. This will ensure that developers are not able to invest in numerous new projects with the proceeds of the booking money for one project, thus delaying completion and handover to consumers. 

3. Regulation on information passed by the developer

This law makes it mandatory for developers to post all information on issues such as project plan, layout and government approvals, land title status, subcontractors to the project, the schedule for completion with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information on to the consumers.

4. Projects to be sold on carpet area

The current practice of selling on the basis of an ambiguous super built-up area for a real estate project will come to a stop as this law makes it illegal. Carpet area has been clearly defined in the law.

5. Developers to pay the fine in case of any delay 

Currently, if a project is delayed, then the developer does not suffer in any way. Now, the law ensures that any delay in project completion will make the developer liable to pay the same interest as the EMI being paid by the consumer to the bank back to the consumer.

The Real Estate Bill 2015- What it means for consumers and sellers

The Real Estate (Regulation and Development) Bill approved by the Rajya Sabha yesterday is being considered as a landmark initiative in regularizing real estate sector. It is a ground-breaking scheme to protect the interest of consumers, promote fair play in real estate transactions and to ensure timely execution of projects.

Till the 80’s real estate development and housing projects were largely the responsibility of the State with very few private players and an embryonic industry. It was during the liberalization of economy with a deliberate push from the Govt. that the industry picked up and is now a sizable contributor to the country’s GDP; however it is also true that the industry is largely unregulated and unorganized.

The bill is being considered the need of the hour as it strives to provide transparency and accountability in all real estate transactions thereby benefiting both the buyers and sellers.

The number of disputes between real estate developers and home buyers due to delays in the completion of projects are expected to reduce as 70% of the money received from the buyers is to be deposited in an Escrow account with a scheduled bank that is to be used solely for the project and cannot be diverted. This move is going to bring the sought after transparency in the realty sector.

Also, apart from the consumers the sellers are expected to benefit in the long term due to increased consumer confidence which will result in increased flow of funds into the business with more foreign institutional investors taking interest. However, the flip side of the coin is on aspect of liquidity, as interest rates are expected to rise and the developers might have to arrange funds from other modes for the short term.

With strict regulations in place like registering of all real estate projects and agents, mandatory public disclosure of all project related documentation, adherence to the declared plans, a regulatory body to monitor adherence and penalty for failure to do so the bill strives to achieve the accountability that was previously missing in the sector. However, the only way to assure the intended result is to make sure that the regulatory body is not another obstacle giving rise to more red tape and corruption.

All in all it is fair to say that the Bill has come at the right time where Real estate sector is on a rise due to continuously raising demand, however only time will tell if the Bill achieves the results.