Real Estate Bill passed in Rajya Sabha
he Real Estate Regulation Bill, which was passed on Thursday in the Rajya Sabha promises to secure the interests of home buyers and expunge corruption and inefficiency from the sector.
Soon after tabling the Bill in the Upper House, Parliamentary Affairs Minister, Venkaiah Naidu, who also heads the Urban Development Ministry, said the government has considered the “views and suggestions of various stakeholders and different political parties in the matter.”
|1||The Bill provides for mandatory registration of all projects with the Real Estate Regulatory Authority in each State. Real estate agents who intend to sell any plot, apartment or building should also register themselves with this authority.|
|2||It makes mandatory the disclosure of all information for registered projects like details of promoters, layout plan, land status, schedule of execution and status of various approvals.|
|3||It seeks to enforce the contract between the developer and buyer and act as a fast track mechanism to settle disputes.|
|4||Fifty per cent of the buyers’ investment has to be deposited into an escrow account that would be used only for the construction of that project.|
|5||The Bill prohibits a developer from changing the plan in a project unless two-thirds of the allottees have agreed for such a change.|
|6||Builders would be responsible for fixing structural defects for five years after transferring the property to a buyer.|
|7||In case builders still cause delays in transferring properties to buyers, the appellate tribunals would intervene and slap fines on them within 60 days.|
Original Bill of 2013 undergoes substantial changes for the better
Rajya Sabha today approved the Real Estate (Regulation and Development) Bill,2016 that seeks to protect the interests of the large number of aspiring house buyers while at the same time enhancing the credibility of construction industry by promoting transparency, accountability and efficiency in execution of projects. The Bill seeks to put in place an effective regulatory mechanism for orderly growth of the sector which is the second largest employer after agriculture.
Moving the Bill pending in Rajya Sabha since 2013 for further consideration and passing, Minister of Housing & Urban Poverty Alleviation Shri M. Venkaiah Naidu stated that over the years the sector has acquired a degree of notoriety which needs to be addressed to enable enhanced flow of investments, for which the Government has announced several incentives in the Budget for 2016-17 and earlier.
Shri Naidu further said that consumer has become the king in telecom sectorfurther to introduction of a regulator. While there are only a few operators in telecom sector, a total of 76,044 companies are involved in real estate sector including 17,431 in Delhi, 17,010 in West Bengal, 11,160 in Maharashtra, 7,136 in Uttar Pradesh, 3,054 in Rajasthan, 3,004 in Tamil Nadu, 2,261 in Karnataka, 2,211 in Telangana, 2,121 in Haryana, 1,956 in Madhya Pradesh, 1,270 in Kerala, 1,202 in Punjab and 1,006 in Odisha.
Stating that real estate sector contributes about 9% GDP, the Minister informed the House that between 2011 and 2015, new projects in the range of 2,349 to 4,488 were launched every year amounting to a total of 17,526 projects with investment value of Rs.13.70 lakh cr in 27 cities including 15 state capitals. According to industry information, about 10 lakh buyers invest every year to own a house of their own.
Shri Naidu asserted that with so many operators in the sector and such huge investments at stake, regulating the real estate sector has become necessary in the interest of consumers and developers. He said: “Consumer shall be the king as in telecom sector and the developer obviously the queen. And there shall be a happy marriage between the two for both to live happily ever after and the Bill seeks to forge such a happy alliance for the benefit of real estate sector.”
The Minister said that several rounds of consultations were held with consumer and developer bodies, state governments and other stakeholders before and after introduction of the Bill in Rajya Sabha in 2013 and as a result, the Bill has undergone substantial changes benefitting the sector as a whole. Shri Naidu outlined the improvements made in the Bill of 2016 as follows:
1.The Government has gone beyond the recommendation of the Select Committee and now requiring developers to deposit 70% of the collections form buyers in a separate accounts towards the cost of construction including that of land as against a minimum of 50% suggested by the Select Committee;
- Norms for registration of projects has been brought down to plot area of 500 sq.mts or 8 apartments as against 4,000 sq.mt proposed in the draft Bill in 2013 and 1,000 sq.mts or 12 apartments suggested by the Standing Committee;
- Commercial real estate also brought under the ambit of the Bill and projects under construction are also required to be registered with the Regulatory Authority. About 17,000 projects are reported to be at various stages of development;
4.Capret area has been clearly defined which forms the basis for purchase of houses, eliminating any scope for any malpractices in transactions
5.Ending the earlier asymmetry which was in favour of developers, both consumers and developers will now have to pay same interest rate for any delays on their part;
6.Liability of developers for structural defects have been increased from 2 to 5 years and they can’t change plans without the consent of two thirds of allottees;
7.The Bill provides for arranging Insurance of Land title, currently not available in the market which benefits both the consumers and developers if land titles are later found to be defective;
8.Specific and reduced time frames have been prescribed for disposal of complaints by the Appellate Tribunals and Regulatory Authorities; and
9.A provision is now made for imprisonment of up to 3 years for developers and up to one year in case of real estate agents and consumers for any violation of Tribunals and Regulatory Authorities.
The Bill requires project promoters to register their projects with the Regulatory Authorities disclosing project information including details of promoter, project including schedule of implementation, lay out plan, land status, status of approvals, agreements along with details of real estate agents, contractors, architects, structural engineers etc. Shri Naidu said that this enables transparent, accountable and timely execution of projects.
The Minister further said that the Real Estate Bill,2016 enables the people meet their genuine aspirations of owning a house including those of urban poor by giving a fillip to affordable housing initiative under which the Government intends to enable construction of 2 crore by the year 2022 under Prime Minister’s Awas Yojana (Urban).
Chronology of events leading to the passage of Real Estate Bill by Rajya Sabha:
–Ministry of Law & Justice suggested a Central Law for regulation of real estate sector in July, 2011;
-Union Cabinet approved the Real Estate Bill, 2013 on June 4,2013;
-Bill was introduced in Rajya Sabha on August 14, 2013;
-Bill was referred to the Department Related Standing Committee on September 23,2013;
-Report of the Standing Committee was tabled in Rajya Sabha on February 13 and in Lok Sabha on February 17,2014;
-Attorney General upheld validity of central legislation for real estate sector on February 9,2015;
-Union Cabinet approved Official Amendments based on the recommendations of the Standing Committee on April 7,2015;
-Bill of 2013 and Official Amendments referred to the Select Committee of Rajya Sabha on May 6, 2015;
-Select Committee tables its report along with the Bill of 2015 on July 30,2015;
-Real Estate Bill, 2015 was approved by the Union Cabinet on December 9, 2015;
-Bill,2015 was listed for consideration and passing in Rajya Sabha on 22nd and 23rd December, 2015 but could not be taken up; and
-The Real Estate (Regulation & Development) Bill, 2016 passed by Rajya Sabha on March 10,2016.
Government lauded for accommodating suggestions of various parties in the Bill
Real Estate (Regulation &Development ) Bill, 2016 was today passed near unanimously by the Rajya Sabha with almost all the parties welcoming the Government’s decision requiring developers to deposit 70% of the collections from the buyers in a separate account to meet construction costs including that of land. Many members also welcomed the balance stuck in the Bill to enable orderly growth of the sector in an atmosphere of trust and enhanced credibility. They felt that the Bill is not anti-business and in fact, in the long run prove to be a much desired catalyst for the real estate sector benefitting both the consumers and project developers.
Many members praised Shri Anil Madhav Dave, Chairman of the Select Committee of the House that examined the Bill for enabling widest possible consultations in a very democratic manner resulting in useful suggestions which were accepted by the Government.
Responding to various issues raised by the members during the three hour long discussion on the Bill, Minister of Housing & Urban Poverty Alleviation Shri M.Venkaiah Naidu said that the implication of bringing the real estate projects under construction under the ambit of the Bill will be examined and required clarity will be given in the Rules to be framed after enactment of the Bill. Shri Rahman Khan (Congress) observed that the Bill provides for purchase of houses based on carpet area and its implication to projects under construction wherein houses have been allotted on super area basis needs to be clarified.
Responding to the issue of competence of Parliament to legislate on real estimate matters involving land raised by Shri Naresh Agarwal of SP and Shri Rabi Bernard of AIADMK, Shri Naidu stated that this was examined thoroughly by the Ministry of Law & Justice and the Attorney General and Central Law in the matter was found to be valid.
On ensuring that there is no discrimination in sale of houses to certain sections of the society raised by Ms.Selja and Shri Rajiv Gowda of Congress, the Minister said that the Constitution offered protection against any such discrimination and if required, this issue will be suitably addressed in the Rules to be framed.
On the demand for applying the provisions of the Bill to all real estate projects irrespective of plot size and number of apartments, Shri Naidu replied that the Bill provides freedom to the States to relax the norm of plot size of 500 sq.mtrs or 8 apartments based on local situations.
Shri Naidu who is also the Minister of Parliamentary Affairs assured the House that Bills could be referred to appropriate Committees for examination if demands in this regard were not meant for delaying their consideration and passage and if the Parliament was allowed to function without disruptions which only delay legislation. He said so while responding to the suggestion of Shri Jairam Ramesh who referred to the good work done by the Department Related Standing Committee and the Select Committee of Rajya Sabha by substantially improving upon the Real Estate Bill of 2013.
18 members spoke on the Bill. Reactions of some members of different parties on the Real Estate Bill, 2016 were as below:
Ms.Selja (Congress) :Our party was strongly committed to protect the interests of consumers. I am happy that the Government decided in favour of 70% of collections to be deposited in a separate bank account. I don’t mind the Government taking credit for the same.
Shri Anil Dave (BJP): The Select Committee could gauge the pain and suffering of consumers at the hands of some unscrupulous promoters. The Bill will prove to be a boon both for consumers and developers.
Shri Naresh Agarwal (SP) : I am not against the Bill but only concerned about the Central Law entering the domain of the States. Imprisonment of developers for any violation straight away is being too harsh.
K.C.Tyagi (JDU) : Chennai floods were a result of unregulated construction. Bengaluru also facing several problems. Welcome the Bills that seeks to check irregularities.
Shri NadimulHaq (Trinamul Congress) : Support the Bill though the remedial measures proposed for the real estate sector do not seem to be broad enough.
Shri Rabi Bernard (AIADMK) : Only MP to oppose the Bill on account of legislative competency of Parliament.
Shri Munkad Ali (BSP): Developers exploit the consumers by raising costs from time to time and this needs to be checked.
Shri RitabrataBannerji (CPM); Support the Bill. It should apply to all projects and should ensure that there is no discrimination.
Shri A.U.SinghDeo (BJD) : The Bill is long over due. Single window mechanism necessary to ensure speedy approvals for construction projects.
Shri Praful Patel (NCP): Intention of the Bill is noble and honourable and marks a good beginning. Results will follow in due course. Land needs to be opened up to decongest core central areas of cities.
Shri Rajiv Chandrasekhar :Bill is the most pro-consumer initiative of the Government. Both the UPA and NDA governments stood firmly on the Bill which is certainly not anti-business. It promotes competition and efficiency.
Shri Anil Desai (Shiv Sena) : Bill strikes a balance protecting the interests of consumers and genuine consumers.
Shri Venkaiah Naidu thanked the members and parties for their enthusiastic support to the Bill.
-Ministry of Housing and Urban Poverty Alleviation, 10-March, 2016