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Real Estate Bill 2016 - PDF Capsule

The document summarizes the Real Estate (Regulation and Development) Bill 2016 passed by the Indian Parliament. The bill aims to protect home buyers, promote fair play in real estate transactions, and ensure timely completion of projects. It establishes a regulatory authority and mandates registration of real estate projects and agents. Builders will need to maintain project funds in escrow accounts and provide details of projects online. The bill is expected to boost transparency and accountability in the real estate sector.

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60 views

Real Estate Bill 2016 - PDF Capsule

The document summarizes the Real Estate (Regulation and Development) Bill 2016 passed by the Indian Parliament. The bill aims to protect home buyers, promote fair play in real estate transactions, and ensure timely completion of projects. It establishes a regulatory authority and mandates registration of real estate projects and agents. Builders will need to maintain project funds in escrow accounts and provide details of projects online. The bill is expected to boost transparency and accountability in the real estate sector.

Uploaded by

Anonymous FW2NnMizqF
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Real Estate Bill 2016 - PDF Capsule

The Indian Parliament recently unanimously cleared the much-delayed Real Estate
Bill 2016. Formally known as the Real Estate (Regulation and Development) Bill
2016, it is expected to promote fair play in real estate transactions and to ensure
timely execution of projects. This will both, protect home-buyers and give the real
estate sector a much needed boost. This is expected to revive the sector infamous for
delays, shortcomings, overpricing and worse.
There is little doubt that the Real Estate Bill 2016 is the right move in an
industry where builders often take money from unsuspecting consumers (usually
middle class) and use them in fraudulent ways.

Why is the Real Estate Bill 2016 needed?

Buyers holding back money due to lack of confidence in the Indian real estate
market.

Buyers avoid getting into legal battles with developers.


Projects being endlessly delayed and possession not given on time.
Builders not compensating for delayed possession, but levying penalties on
buyers for delayed payments.
Arbitrary changes in layout plans and the actual construction turning out to be
different from the advertised project.
Land Hoarding: Money collected for one project being diverted to fund
other projects or buy different lands. It results in scarcity of land and hence
escalates land prices.

Key Features of the Bill


General Points of the bill

The bill will regulate both commercial and residential real estate projects.
It seeks to set up Real Estate Regulatory Authority (RERA) to oversee real
estate transactions.
It will also help establish state-level RERAs.
It makes registration of real estate projects and real estate agents mandatory.

It mandates that builders upload details of all registered projects, layout


plans, land status, approvals, agreements along with details of real estate
agents, contractors, architect, structural engineer etc. on the website of the
RERAs.

Rules for Builders/Promoters

All commercial and residential real estate projects with land over 500 square
metres, or having 8 apartments, must be registered with RERA.
Builders must maintain 70% of the amount collected for the project in a
separate escrow account and use it ONLY for the construction of the said
project. However, individual state governments can alter this amount to less
than 70% in their particular state. Escrow is a temporary account held by a
3rd party during transaction between 2 parties.
Builders need to specify a timeframe of the project, or else they have to pay
penalties.
It stops promoters from changing plans and design without consent of twothirds of the consumers.
The Bill defines carpet area of a property as net usable floor area, excluding
the area covered by its external walls, under shafts, balconies and terraces.
Builders to be responsible for fixing structural defects for 5 years after
transferring the property to a buyer.

Dispute Settlements

The bill seeks to establish fast track dispute resolution mechanisms through
adjudicating officers and Appellate Tribunal.

It bars civil courts from taking up real estate matters. However, consumer
courts are allowed to hear such matters.

Fast-tracking

Allow RERAs to direct state govt. to establish a single window system for
providing clearances for projects.
A time limit should be specified for state and local authorities to issue
completion certificates.

Penalties

If promoter does not register his property: Penalty up to 10% of the project
cost.
If promoter dodges order issued by the RERA: Imprisonment for up to 3
years, and/or an additional fine of 10% of the estimated project cost.
If promoter provides false information: Penalty up to 5% of the estimated
project cost.
If promoter violates any other provision of the act: Penalty up to 5% of the
estimated project cost.
Fine for the agents is INR 10,000 per day during the period of violation of
provisions.

Impact of the bill on the Real Estate Industry

Ensures efficiency and transparency in all property related transactions.

Improves accountability of the developers and protects consumer interest.


Promotes fair-play and timely execution of the projects.
Helps in differentiating a good developer from a bad one.
Single window clearance will aid faster execution of the projects.
Boosts positive sentiments among the buyers and will in turn bring more FDI.
Timely completion will result in increase in supply of homes and help bring
down prices.

Overall boost to the economy as housing sector has many backward and
forward linkages with other industries.
o Backward Linkages: steel, cement and other building materials
o Forward Linkages: furniture and furnishings, electrical and electronics,
interior decoration.

Creation of more employment opportunities.


It will help achieve government's ambitious plan of Housing for All by
2020.
It will help curb black money as real estate sector constitutes about 11% of
GDP and is particularly vulnerable to black money through underreporting of
transaction prices while paying taxes.

Conclusion
The real estate bill is anticipated to bring on a stimulating modification in how
various stakeholders revamp their structural capabilities and boost investors
confidence in the realty sector. However, it'll take time before the real estate
regulator becomes a reality, as states have to be compelled to follow up once it gets
presidential assent.

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