Real Estate Regulatory Bill—What Is In It For You?
It was only a few weeks ago when hundreds of buyers in NOIDA came together in a protest against extra charges demanded by the builders during the time of possession. There have been similar instances in the past when aggrieved buyers have turned to government ministries and other authorities due to long delayed housing projects, seeking justice and immediate action. The situation continues to get worse on an everyday basis. With the news of the Real Estate Regulatory Bill pending for this winter session of the parliament everywhere, let's take a closer look at how it will impact the future of the real estate market in India.
What will change for you, and how much, if the Bill gets approved? Here is our take on it:
1. Transparency in project details
Fake promises by the builders where they don't intend on delivering amenities after the completion of the project, will become history. This is because the Real Estate Regulatory Authorities (RERAs) website will require all builders to upload details of their project that cannot be changed at a later stage. If held guilty, the builder will be penalized at 10 percent of the project cost or up to three years of imprisonment. Thus there will only be carefully verified launches, and no more pre-launches.
2. Super Area VS. Carpet Area
Common passage area, stairs and other spaces like club houses constitute for 20 to 30 percent more than the Carpet Area of the flat, these are included in the Super Built up Area. The Carpet Area is the actual area that the buyer needs to be informed about and charged for. After the Bill is implemented, the builders will be prohibited from charging the buyers at the time of possession for any extra additions to the Super Area, which is a very prevalent and unfair practice today.
3. Deadlines will mean deadlines
One of the most common practice among builders is stretching the possession date beyond the promised time. The fact that such a situation takes a huge toll on the financial and personal aspect of buyers' life cannot be emphasized enough. The Real Estate Regulatory Bill will ensure strict adherence to the promised schedule. In case of any folly, the buyers can ask for 100 percent refund from the defaulting builders.
4. Legal action will be taken
For the longest time, real estate cases have been pending in the consumer courts. There was no set mechanism to redress the grievances of the buyers in a quick and efficient manner. However, with the Real Estate Regulatory Authorities (RERAs) in place, there is good news for the buyers! They can take quick legal action against the builders that exploit their positions, and their grievances will be redressed at a faster pace under RERA.
5. Brokers and agents will have to registered with RERA
The Bill will also require the agents dealing with a particular project to be registered officially on the website of RERA. This is proposed to remove fraudulent practices by the agents who mis-sell to innocent buyers. This will further strengthen the system and ensure transparency in property transactions.
With all these advantages, it's important to note that the Bill is slightly unfair on the builders as well. This is so because while it holds them accountable for delays of the project, there is no regulatory mechanism to curb the government clearance/approval delays that are entwined with any real estate project in the country. Also, the regulation to keep 70% of a project's fund in a separate bank account to ensure it is not used for any other purposes except for the project at hand, is not well thought out. Because there may be projects that don't fall into the 70-30 watertight compartmentalization.
Thus, we believe that with the increased level of control on every aspect of the sector, the Real Estate Regulatory Bill will have the effect of initially slowing down the market. Nevertheless, it will simultaneously aid to enhance the confidence of the buyers in the market, due to a more robust system. This will in turn lead to an eventual increase in demand, and thus benefit the market in the long run.
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