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:
- 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;
- Capret area has been clearly defined which forms the basis for purchase of houses, eliminating any scope for any malpractices in transactions
- 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;
- 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;
- 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;
- Specific and reduced time frames have been prescribed for disposal of complaints by the Appellate Tribunals and Regulatory Authorities; and
- 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.