Proposed Realty Bill to tighten noose around developers, defaulters to be jailed! -
Solicitor General of India. “It is a forward looking measure.”
The proposed real estate regulator would make registration compulsory for property agents as well as for residential projects over 1,000 square metres or 12 dwelling units in an effort to improve transparency and accountability in the sector.
The Cabinet will soon consider the bill that seeks to establish the regulator, officials said. The bill will also include provisions for imprisonment of builders who sell flats or plots before registering them with the authority, they said.
Since the minimum threshold area for mandatory registration has been reduced to 1,000 square metres of land from the earlier proposed 4,000 square metres, the bill would virtually cover the entire supply of residential units from the organized sector.
The bill also makes it mandatory for the developers to deposit 70% of the fund received from the homebuyers in a separate bank account, which will be used for the development of the project. The idea is to ring-fence the project costs to avoid diversion of funds and ensure timely completion.
“The proposed bill empowers the regulator to recommend imprisonment of defaulting builders, which is important to clean up the sector that is not transparent,” Gopal Subramanium, former
The upfront registration before selling the dwelling units means that real estate developers would need to get most of the approvals from different authorities before they can sell flats in a project. Currently, a real estate projects needs between 50 and 60 approvals from the different authorities, depending upon the state’s guidelines.
The bill provides for regulatory authorities to be established by states with specified functions, powers and responsibilities to exercise oversight of transactions and settle disputes.
The role of the Centre would be to establish the Appellate Tribunal as the higher-level adjudication mechanism with regional benches. To meet the disclosure condition, developers will have to put out details of promoters, project, layout and development plans, land status, names and addresses of the real estate agents, contractors, architects among others.
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