The Real Estate Bill can bring greater credibility to the sector through more transparency as well as accountability and could encourage flow of FDI funds into the market, a Nomura report says.
The Upper House on March 10 passed the Real Estate (Regulation and Development) Bill, 2016, aimed at protecting the interests of home buyers, bringing in more transparency and accountability into the real-estate sector.
According to the global financial services firm, the Bill could go a long way towards protecting the interests of home buyers by facilitating more timely completion of projects and ensuring greater transparency.
This bill was touted as a major reform measure to regulate the vast real estate sector and bring order in it.
“Mandatory disclosures and registration may reduce black money transactions in this sector; and greater credibility of the real-estate sector (through greater transparency and accountability) could encourage flow of FDI funds into the sector,” Nomura said in a research note.
“The Bill is yet to be passed in the Lower House, though that should be easier, as the government has an absolute majority in the Lower House,” Nomura added.
The key features of the bill include, timely execution, accountability and transparency.
The Bill proposes setting up state-level real-estate regulatory authorities, where builders will be mandated to register all projects above 500 sq mts (earlier 4000). This would apply to both residential and commercial real estate projects, including those currently under construction.
State-level appellate tribunals will be set up for addressing complaints. A timeline of a maximum 60 days has been set for resolution of disputes.
Failure to register a project could result in imprisonment of up to three years for developers or 10 per cent of the project cost or both.
Home buyers and real-estate agents could also face up to one year of imprisonment, if found in any violation of the tribunals or regulatory authority.