Real Estate Regulation Bill, 2013: Civil Services Mentor Magazine - November 2013

REAL ESTATE REGULATION BILL, 2013

The Real Estate (Regulation and Development) Bill, 2013 has been introduced in the Rajya Sabha. Housing minister Girija Vyas said the bill seeks to establish the Real Estate Regulatory Authority to protect the interest of consumers in the real estate sector. Vyas also said the bill is for regulation and promotion of the real estate sector and to ensure sale of plot, apartment of building, as the case may be, in an efficient and transparent manner.

The Real Estate (Regulation and Development) Bill, 2013 is a pioneering initiative to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects. The Bill has been prepared by the Government after extensive consultations with States, experts and stakeholders. The Bill has been supported by the States along with Ministry of Consumer Affairs, the Competition Commission and Tariff Commission among others.

The Bill is being proposed under Entries 6, 7 and 46 of the Concurrent List of the Constitution of India, which deals with Transfer of Property, Registration of Deeds and Documents, and Contracts.

It contains elaborate provisions to bring in the much needed transparency in real estate dealings through provisions for registration of real estate projects and real estate agents with the Real Estate Regulatory Authority; functions and duties of promoters and agents; rights and duties of allottees etc., The Bill once enacted will lead to establishment of Real Estate Regulatory Authority and Real Estate Appellate Tribunal in every State for registration of all real estate projects and for speedier dispute resolution. Stringent penalties have been sought to be imposed on habitual offenders. This it is believed will act as a deterrent for those few erring builders who bring bad name to the developer community at large.

Currently, the real estate and housing sector is largely unregulated and opaque, with consumers often unable to procure complete information, or enforce accountability against builders and developers in the absence of effective regulation. The Bill is expected to ensure greater accountability towards consumers, and to significantly reduce frauds and delays. The Bill aims at restoring confidence of the general public in the real estate sector; by instituting transparency and accountability in real estate and housing transactions which in turn will enable the sector to access capital and financial markets essential for its long term growth.

The Bill is also expected to promote regulated and orderly growth through efficiency, professionalism and standardization. It seeks to ensure consumer protection, without adding another stage in the procedure for sanctions.

The salient features of the draft Bill are as under:

Applicability of the Bill: The proposed Bill applies to residential real estate i.e. housing and any other independent use ancillary to housing. However it shall not apply where the area of land proposed to be developed does not exceed 1000 square meters or the number of apartments proposed to be developed does not exceed 12, inclusive of all phases, or an area or number of apartments as notified by the Central Government on recommendations from the appropriate Government, which may be different for different States or Union territories but not more than 1000 square meters or 12 apartments.

Important Definitions:

The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet area’, ‘advertisement’, ‘real estate project’, ‘prospectus’ etc. Introduction of the concept of using only ‘carpet area’ for sale, which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices.

Establishment of Real Estate Regulatory Authority:

Establishment of one or more ‘Real Estate Regulatory Authority’ in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, with specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest;

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