4 Reasons Why Real Estate Regulatory Bill Is Good News for Home Buyers

Recently, M Malyadri, the managing director of MM Foundations and Constructions Pvt Ltd, was arrested for forging the occupancy certificate issued by the Greater Visakhapatnam Municipal Corporation. The flat buyers who had purchased apartments in MM paradise, one of the residential projects of Malyadri’s company, were shocked, unsure what to do. This wasn’t the lone instance of builders not informing the buyers about the pending government clearances of residential projects. However, this is set to change with the approval of the Real Estate (Regulation & Development) Bill on April 7. Many now expect the real estate markets to become more transparent and accountable. The Bill applies to residential, commercial and industrial projects.

PropTiger.com explores what the Bill might mean for home buyers:
 

​1.  Enforceability of contracts

The Bill would compel builders to honor their contracts. If a developer does not deliver the apartment, plot or building on the date previously specified, he would be expected to return the amount with interest rate and compensation.  

2.  Greater accountability

If the developer does not fulfill any of his obligations, the allottees can demand restitution. Moreover, if any structural defects emerge within two years of the transaction, the builder will have to compensate the allottees if they are not rectified on time. The  builders will also be expected to build according to the structural norms approved by concerned authorities. This would lead to greater  accountability in real estate transactions.

3.  Greater transparency

Builders will be fined for not registering projects, or for canceling the registration. The builders will not be allowed to launch a project  before obtaining all the clearances.  This will inspire more trust in buyers. But, many believe that this will lead to greater corruption  because the regulators will pressurize the builders to pay bribes to receive faster clearances. The builders currently charge buyers for  the super built up area, which includes the common area, the stairs and other amenities. According to the Bill, the carpet area will be  the unit for selling and enticing. This will be a great relief for the buyers because they are often mislead by the developers who mention  the super built up area and skip mentioning the carpet area.

4. Faster resolution of complaints

The real estate regulatory authority will take decisions on complaints within 60 days. The buyers will also be allowed to approach consumer forums to register complaints.

Guidelines for Brokers:

The Bill in its latest form also makes the real estate agents accountable for non-compliance of orders of the Regulatory Authority and Appellate Tribunals.

Here are the two key points:

Two Revisions:

• According to the 2013 version of the Bill, the developers were expected to set aside 70% of the funds they receive from buyers in advance for a project in a special account, to be used solely for the process. Now, they are expected to set aside 50%.
• The amended Bill does not include the clause that grants power to the appellate tribunal to punish any officer of a real estate company for not complying with the orders of the regulator. According to the revised Bill, the structural norms can be altered if 66.66% of the buyers agree with the changes.

Many believe that these two amendments undermine the earlier version of the Bill.