Frequently Asked
Questions (FAQs) on Real Estate (Regulation and Development) Bill, 2013
1. Q: Why need for regulation in real estate sector’?
Ans: The real estate sector plays a catalytic role in fulfilling the
need and demand for housing and infrastructure in the country. While this
sector has grown significantly in recent years, it has been largely
unregulated, with absence of professionalism and standardization, and lack of
adequate consumer protection, which has constrained the healthy and orderly
growth of the industry.
Also, the need for regulating the sector has been
emphasized in various platforms, forums, and media reports. This view has also
been strongly reiterated by the Ministry of Consumer Affairs, the Competition
Commission and Tariff Commission, in recent times.
2. Q: What are
the most important provisions of the Bill?
Ans: The proposed Bill applies to residential real estate
i.e. housing and any other independent use ancillary to housing. However, it is
important to know that the Bill only intends to regulate ‘transactions’ i.e.
buying and selling of residential real estate, and does not intend to regulate
‘construction’ which is the domain of States/ULB’s.
As the Bill is aimed at infusing the much lacked,
transparency in the sector, it provides to mandatory Public Disclosure of all
project details, with specified functions and duties of promoter.
The Bill provides for establishment of Real Estate
Regulatory Authority and Appellate Tribunal for a speedier dispute redressal
mechanism
One of the novel provisions are the registration of
real estate agents, which have hitherto been un-regulated, with clear
responsibilities and functions, which would lead to money trail and curb money
laundering.
And like all regulatory Bills the Bill provides for
Punitive Provisions to ensure compliance and to enforce the provisions of the
Bill. Punitive provisions include de-registration of the project and penalties
are provided in case of contravention of the provisions of the Bill or the
orders of the Authority or the Tribunal.
3. Q: Some people are calling it a populist move,
realtors` body CREDAI has said the proposed law should govern all stakeholders
of the industry and not only the developers?
Ans:
There has been a crying need for a real estate regulator, on the lines of
telecom, securities, insurance, electricity etc. In fact on the Regulatory
Index India is ranked quite low, in the sector, which has prevented domestic and
foreign investment into the sector, which could have contributed to enhanced
activity, and increase in GDP growth.
The Bill regulates ‘transactions’ in the sector, and
thus all the stakeholders involved in the ‘transaction’ i.e. the
promoter/seller, the allottee/buyer and the real estate agent, all three are
regulated under the proposed Bill, with specified functions and duties.
The Bill does not regulate ‘construction’ which is the
domain of States/ULBs. The main concern of the developers is the need for a
single window system for project approvals/clearances, towards which my
Ministry has constituted an Expert Committee, which is also represented by
industry bodies, which would recommend to the States to implement single window
system.
As far as the Real Estate Bill is concerned its remit
is limited to transactions, and thus regulates all parties involved in it.
4. Q: The Real Estate Regulatory Bill that seeks to
bring transparency and accountability in the realty sector contention that
prices would rise by 30 per cent once this Bill is passed in the Parliament?
Ans: This is not
true, and from where have such estimates come. The Bill is aimed at consumer
protection, by creating an online system for information sharing so that there
is mutual trust between the developers and the buyers, and projects implemented
in time.
The enactment of the Bill will lead to enhanced
activity in the sector, leading to more housing units being supplied to the
market. It will bring in the much needed confidence to infuse more investment
and in turn to stabilize the prices of houses being sold.
The Bill works for the benefits of consumers and also
for the benefits of promoters, and for the overall benefit of the sector.
5. Q: Delay due to approval from government agencies.
Why only to residential projects and commercial real estate property is not
considered under this regulation?
Ans: On the delay
due to approval from government agencies, The Ministry of Housing & Urban
Poverty Alleviation is advising the States to follow a single window model for
project clearances, but that’s an exercise beyond the provisions of the Bill.
One point often missed is that, the proposed Bill only
regulates the sale of residential real estate, and not its development. The promoter
is free to carry on development, but what the Bill provides is that he can only
sell after all approvals are in place and he has registered his project with
the Regulator under the Bill. And the registration requirements under the Bill
are on a real-time basis, which does not lead to another layer of approvals, as
are made out to be.
Limiting the application of the Bill to residential
properties would keep the focus of the Regulator, and the need for consumers
too is in that part of the sector.
6. Q: The projects, which are already built or are in
construction Registration with the regulator won`t be mandatory for projects
less than 4000 square meter. So, many small developers will escape from
registration and government regulator`s control?
Ans: The initial
draft had provided for 4000 square meters, which has now been reduced to 1000
square meters or 12 apartments, whichever is applicable, after extensive
consultations with the States and other stakeholders. Also, the Bill very
specifically provides for prospective regulation.
7. Q: Specifying actual carpet area becomes mandatory
Developers are selling flats on the basis of super built area, which includes
common passage area, stairs and other areas that is 20-30 percent more than
actual flat area?
Ans: What the Bill says is the disclosure by the promoter
of the number of apartments for sale has to be based on carpet area, and carpet
area has been defined. The buyer should know what he is actually getting and
paying for. Concepts such as super-build up etc. are confusing and the Bill
intends to standardize the requirements .This will substantially reduce the
power asymmetry prevalent in real estate transactions.
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