A real estate regulator — to be set up in every state — will ensure that private developers get all their projects registered with it before sale and only after obtaining all necessary clearances.
"It will be mandatory for developers under the law to get every project registered with the regulator before selling any immovable property," an official said.
While the commercial real estate has been kept out of purview of the proposed bill, it will apply to residential buildings.
There is a provision for mandatory public disclosure of all project details like credentials of promoters, lay out plan, land status, carpet area and number of apartments booked and status of statutory approvals, addressing a major concern of buyers about incomplete or fraudulent land acquisition and pending clearances.
The consumer-friendly legislation will clearly define carpet area and private developers will not be allowed to sell houses or flats on the basis of ambiguous super area.
The builders won't be allowed to publish misleading advertisements to lure buyers while advertising the project. "They will have to use the pictures reflecting the actual project that will be delivered to homebuyers," an official said.
The developer will have to deposit 70% of funds received for a particular project in a separate bank account to cover the construction cost of the project. This provision was made to discourage developers from diverting funds of a particular project to another that often causes inordinate delay.
Punitive provisions ranging from a penalty which may be up to 10% of the project cost, de-registration of the project and imprisonment are being made in the bill.
The Real Estate (Regulation and Development) Bill 2013, which seeks to provide a uniform regulatory environment to the sector, was opposed by private developers in totality but housing minister Ajay Maken stuck to it, saying the basic tenet of the legislation is based on public disclosure that will infuse transparency.
Under the bill, there will be a model builder-buyer agreement which is expected to reduce ambiguities in real estate transactions that not many buyers are familiar with.
Real estate agents will also be asked to register with the regulator. Agents, an important link between the promoter and buyer, have been an unregulated lot till now. Once they are registered, it will help in curbing money laundering.
For fast tracking settlement of disputes, an adjudicating officer not below joint secretary in the state will be appointed by the authority. There will also be Real Estate Appellate Tribunal that will hear appeals from orders, decisions or directions of regulator and adjudicating officer.
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