Rajya Sabha clears Real Estate Bill
Notoriety in real
estate sector needs to be ended to encourage investment flows, says the
Minister
If telecom sector
with a few operators has a regulator, real estate sector with over 76,000
companies needs one-Shri Naidu
Original Bill of
2013 undergoes substantial changes for the better
Rajya Sabha today approved the Real Estate (Regulation and Development)
Bill,2016 that seeks to protect the interests of the large number of aspiring
house buyers while at the same time enhancing the credibility of construction
industry by promoting transparency, accountability and efficiency in execution
of projects. The Bill seeks to put in place an effective regulatory mechanism
for orderly growth of the sector which is the second largest employer after
agriculture.
Moving the Bill pending in Rajya Sabha since 2013 for further consideration and
passing, Minister of Housing & Urban Poverty Alleviation Shri M. Venkaiah
Naidu stated that over the years the sector has acquired a degree of notoriety
which needs to be addressed to enable enhanced flow of investments, for which
the Government has announced several incentives in the Budget for 2016-17 and
earlier.
Shri Naidu further said that consumer has become the king in telecom
sectorfurther to introduction of a regulator. While there are only a few
operators in telecom sector, a total of 76,044 companies are involved in real
estate sector including 17,431 in Delhi, 17,010 in West Bengal, 11,160 in
Maharashtra, 7,136 in Uttar Pradesh, 3,054 in Rajasthan, 3,004 in Tamil Nadu,
2,261 in Karnataka, 2,211 in Telangana, 2,121 in Haryana, 1,956 in Madhya
Pradesh, 1,270 in Kerala, 1,202 in Punjab and 1,006 in Odisha.
Stating that real estate sector contributes about 9% GDP, the Minister informed
the House that between 2011 and 2015, new projects in the range of 2,349 to
4,488 were launched every year amounting to a total of 17,526 projects with
investment value of Rs.13.70 lakh cr in 27 cities including 15 state capitals.
According to industry information, about 10 lakh buyers invest every year to
own a house of their own.
Shri Naidu asserted that with so many operators in the sector and such huge
investments at stake, regulating the real estate sector has become necessary in
the interest of consumers and developers. He said: “Consumer shall be the king
as in telecom sector and the developer obviously the queen. And there shall be
a happy marriage between the two for both to live happily ever after and the
Bill seeks to forge such a happy alliance for the benefit of real estate
sector.”
The Minister said that several rounds of consultations were held with consumer
and developer bodies, state governments and other stakeholders before and
after introduction of the Bill in Rajya Sabha in 2013 and as a result,
the Bill has undergone substantial changes benefitting the sector as a whole.
Shri Naidu outlined the improvements made in the Bill of 2016 as follows:
1.The Government
has gone beyond the recommendation of the Select Committee and now requiring
developers to deposit 70% of the collections form buyers in a separate accounts
towards the cost of construction including that of land as against a minimum of
50% suggested by the Select Committee;
2. Norms for
registration of projects has been brought down to plot area of 500 sq.mts or 8
apartments as against 4,000 sq.mt proposed in the draft Bill in 2013 and 1,000
sq.mts or 12 apartments suggested by the Standing Committee;
3. Commercial real
estate also brought under the ambit of the Bill and projects under construction
are also required to be registered with the Regulatory Authority. About 17,000
projects are reported to be at various stages of development;
4.Capret area has
been clearly defined which forms the basis for purchase of houses, eliminating
any scope for any malpractices in transactions
5.Ending the
earlier asymmetry which was in favour of developers, both consumers and
developers will now have to pay same interest rate for any delays on their
part;
6.Liability of
developers for structural defects have been increased from 2 to 5 years and
they can’t change plans without the consent of two thirds of allottees;
7.The Bill
provides for arranging Insurance of Land title, currently not available in the
market which benefits both the consumers and developers if land titles are
later found to be defective;
8.Specific and
reduced time frames have been prescribed for disposal of complaints by the
Appellate Tribunals and Regulatory Authorities; and
9.A provision is
now made for imprisonment of up to 3 years for developers and up to one year in
case of real estate agents and consumers for any violation of Tribunals and
Regulatory Authorities.
The Bill requires project promoters to register their projects with the Regulatory
Authorities disclosing project information including details of promoter,
project including schedule of implementation, lay out plan, land status, status
of approvals, agreements along with details of real estate agents, contractors,
architects, structural engineers etc. Shri Naidu said that this enables
transparent, accountable and timely execution of projects.
The Minister further said that the Real Estate Bill,2016 enables the people
meet their genuine aspirations of owning a house including those of urban poor
by giving a fillip to affordable housing initiative under which the Government
intends to enable construction of 2 crore by the year 2022 under Prime
Minister’s Awas Yojana (Urban).
Chronology of
events leading to the passage of Real Estate Bill by Rajya Sabha:
-Ministry of Law
& Justice suggested a Central Law for regulation of real estate sector in
July, 2011;
-Union Cabinet
approved the Real Estate Bill, 2013 on June 4,2013;
-Bill was
introduced in Rajya Sabha on August 14, 2013;
-Bill was referred
to the Department Related Standing Committee on September 23,2013;
-Report of the
Standing Committee was tabled in Rajya Sabha on February 13 and in Lok Sabha on
February 17,2014;
-Attorney General
upheld validity of central legislation for real estate sector on February
9,2015;
-Union Cabinet
approved Official Amendments based on the recommendations of the Standing
Committee on April 7,2015;
-Bill of 2013 and
Official Amendments referred to the Select Committee of Rajya Sabha on May 6,
2015;
-Select Committee
tables its report along with the Bill of 2015 on July 30,2015;
-Real Estate Bill,
2015 was approved by the Union Cabinet on December 9, 2015;
-Bill,2015 was
listed for consideration and passing in Rajya Sabha on 22nd and
23rd December, 2015 but could not be taken up; and
-The Real Estate
(Regulation & Development) Bill, 2016 passed by Rajya Sabha on March
10,2016.
AAR
March 10,2016
