The Noida Extension imbroglio could have been avoided had the real estate regulator proposed by the Union housing ministry been put in place earlier.
Now, the long-pending legislation – Real Estate (Regulation and Development) Bill – aims to infuse “accountability and transparency” in the realty sector, backed by stringent norms.
Builders and developers will have to register each project with the real estate regulator prior to its launch. They cannot advertise, invite bookings and receive advances or deposits from customers for the project without registering it with the regulator. Any deposit or advance can be taken only after entering into an agreement of sale with the customer, stipulates the new draft bill.
The promoter has to submit information about the project like plot size, layout plan and authenticated copy of approval and sanction by competent authority for registration. Declaration has to be made by the developer to the regulator regarding legal title of the land and that the plot is free from all encumbrances along with the project’s completion timeline.
The developer has to make a declaration that 70% of the money taken from customers for a particular project would be periodically deposited in a separate bank account and would be used for construction.
The builder has to make a commitment that project or phase of the project has to be completed as per the registration’s terms and conditions. The regulator will scrutinize the builder’s application within a month before the grant of registration to any project.
Once registration is obtained from the regulator, the promoter has to provide land title details, agreement proforma to be signed by the customer, the number and the carpet area of each flat or house or part of flat or house for sale in the project and the construction plan on its website. If a builder fails to register any project with the regulator, he may invite imprisonment that may extend up to three years or a penalty which may go up to 10% of the project’s estimated cost.
The legislation, mandatory for state governments, aims to set up a Real Estate Regulatory Authority in every state and a Real Estate Appellate Tribunal at the Centre. “The bill aims to intervene and ensure transparency and accountability on part of the developers and protect consumers from fly-by-night operators,” Union housing minister Selja said.
Regarding ‘criticism’ from the realty sector, the minister said: “I don’t have a rigid stand on the issue. We will consult everyone whoever wishes to and strike a balance.” She clarified that the Central legislation does not encroach upon state’s jurisdiction as the new bill deals with “real estate transactions” and not “land”.