Tuesday, 12 May 2015

Delay in real estate bill increases pain for home-buyers

Following Rahul Gandhi's accusation of the NDA real estate bill being pro-realtor, three Congress MPs on the 21-member select committee have a tough task at hand as they now have to walk the talk on their professed concern for home buyers, who often complain of getting shortchanged by builders.

To begin with the delay in enacting a legislation, which was first conceived in 2009, will be a negative for home buyers, many of whom are still awaiting possession of apartments that they had booked six-seven years ago.

All these years, builders have been accused of exploiting consumers whether it's delivering the promised carpet area, facilities and services. Builders have also been changing the structure and squeezing the open area for commercial gain.

The delay in passage of the bill also comes as a relief for the builders who have been lobbying that establishing the regulator could adversely impact the sector that has been identified as one of the key sectors to accelerate growth.

"Now it's a challenge for the political parties to protect the improvements that were made in the earlier bill and improve upon those provisions.

While most of the provisions of the old bill have been retained to keep a check on builders from exploiting the consumers, new clauses have been added to the bill to strengthen consumer protection," a government source said.

Several of the proposals put forward by the real estate lobby have also been rejected.

The NDA government has already accepted 23 of the 39 recommendations made by the parliamentary standing committee. "Now the political parties should have pointed out what needed to be improved rather than delaying the move to establish the regulator," another government official said.

These include bringing industrial, residential and commercial projects under the regulator, including balconies, terraces and verandas in the carpet area and builders' responsibility to clear debris, to name a few.

The UPA bill has also been improved by introducing the provision of registering the ongoing projects, prohibiting plans and designs without consent of two-third allottees and limiting time period up to 60 days for the regulator to decide disputes.

While the Congress has alleged that the proposal for reduction in deposit of funds from 70% to 50% collected from allottees in a separate account for the project goes against the home buyers, the government has argued that the change has been made considering the high capital investment by a developer to get land and other necessary approvals.

Responding to accusation by Congress against the provision of "force majeure" for extension of registration, a government source said that this provision is applicable only in cases where the project gets delayed due to reasons that are out of the builders' or that of the government's control.

The bill seeks to regulate transactions between buyers and promoters of residential real estate projects. It also seeks to establish state-level regulatory authorities called Real Estate Regulatory Authorities. According to the bill's provisions, residential real estate projects, with some exceptions, would need to be registered with the RERAs. Promoters also cannot book or offer these projects for sale without registering them. Real estate agents dealing in these projects would also need to register with the RERAs.

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