Reforms in Real Estate Industry May Empower Property Buyers

The Real Estate Regulator Bill 2013 is likely to bring greater transparency in real estate transactions.

A recent survey has ranked the real estate industry as the second worst after telecom in terms of service quality. (Photo: Reuters)

The Real Estate Regulator (Regulation and Development) Bill, pending since 2013 maybe passed and if it is the realty regulator proposed in it will make life much easier for property buyers and investors.

This will also pave the way for more organised, fair, credible and transparent property transactions. The Indian realty industry, thus, will also be set to become more investor-friendly.

A recent survey by the Ministry of Consumer Affairs, dubbed real estate sector as the second worst industry after telecom in terms of quality of service. Liquidity crisis, unaffordable property prices, high delivery defaults, low sales and low investor confidence has plunged the sector into crisis.

In this backdrop, real estate regulatory authority – cleared by the upper house of parliament and the main opposition, the Congress party, assuring support in the lower house – assumes significance. It seeks to check fraudulent practices and provide a fair deal to property buyers. The consumer-friendly landmark legislation is aimed at setting up regulatory and redressal mechanism, the absence of which is responsible for the present mess in the real estate.

(Photo:iStock)

Given this background, the real estate regulatory authority bill – cleared by the upper house of parliament and the main opposition, the Congress party, assuring their support in the lower house – assumes significance. The consumer-friendly landmark legislation is aimed at setting up a regulatory and redressal mechanism, the lack of which is responsible for the current mess in the real estate.

The key provisions of the legislation, which bring brokers along with developers under its ambit, include:

Mandatory registration of projects -

• Need to provide complete information on project plan, lay-out, approvals, land title.
  
• Also required is completion schedule, with ban on pre-launch advertising without sanctions.
  
• Mandatory disclosures in ads and prospectus to check gap between promise and delivery.
  
• Sale of property only on the basis of clearly defined carpet area.
  
• Move to ensure buyers get exactly the space for which payment is made.
  
• Mandatory escrow account to check diversion of funds that delay projects.
  
• Provisioning of fair compensation for delays in delivery.
  
• Focus also on quality of construction, speedy dispute resolutions.
  
• Also proposed penalty and imprisonment for non-complying developers.

With the passage of the Real Estate Bill, things are about to change – of course, for the benefit of consumers. (Photo: iStockphoto)

The provision of a model and fair buyer-seller agreement under the regulatory mechanism will put an end to short-changing of home buyers on account of hidden charges like external development charge (EDC), internal development charge (IDC), maintenance fee, club charges etc.

So, there will be no escalation of charge and the home buyer will not be liable to pay anything more than what is already mentioned in the agreement. The provision of speedy and time-bound dispute redressal within two months is also a big confidence-booster for home buyers who were till now deprived of this and were forced to run from consumer to lower to higher courts for justice.