Home buyers have long been at the mercy of unscrupulous developers. The Real Estate Regulatory Bill now allows setting up of an apex body to regulate all real estate activity in the country. Here is how you will benefit.
There are numerous horror stories of buyers booking flats in a project during pre-launch, only to find out later that the necessary approvals have not been obtained. The Bill seeks to clamp down on developers by disallowing pre-launches of projects where approvals from the local authorities and registration from the regulator are pending. Developers will have to disclose approval status, project layout and timeframe for completion to the regulator and customers.
Often the reason for inordinate project delays is diversion of funds to other projects. The developer will now have to park 70% of the project funds in a dedicated bank account at the outset, which can only be used for the earmarked project. “This would ensure timely construction and act as a safeguard in the event of any inordinate delays,” says Sanjay Dutt, MD (India), Cushman & Wakefield.
Developers will now have to sell homes on the basis of ‘carpet area’ and not the ‘super built-up area’. The latter was often misused by developers to levy additional charges for common areas.
Builders often advertise designs and amenities of a project, only to deliver a finished product far removed from the claims. Developers will now have to return payment with interest to buyers who are misled by statements or representations in any form. Also, the developer will not be allowed to make any changes to the original plan midway without the written consent of at least two-third of buyers. In case of any deficiency noticed after handover of possession, the buyer can contact the developer within a year to seek after-sales service.
The Act proposes to bring parity between the buyer and seller by making the latter liable to pay the customer the same interest as demanded of the buyer. In case of disputes, the Appellate tribunals will have to adjudicate within 60 days and regulatory authorities will have to dispose of complaints in 60 days. The Act also provides for imprisonment up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of tribunals or monetary penalties or both.
Existing buyers facing delay in getting possession will also be covered under the new Act. While under-construction properties are sought to be brought under its ambit, it is unclear how this will be implemented.