Real estate regulator is a much-needed measure
Millions of existing owners of properties as well as those queuing up to buy them have reason to cheer with the Cabinet clearing the amended Real Estate (Regulation and Development) Bill since this will bring in vital reform into the largely opaque and unregulated real estate sector. Around 11 million dwelling units, the government estimates, remain out of the market as the owners are unwilling to put them in the market—since the new law necessitates regulators and appellate tribunals in each state, this will speed up the process of sorting out property disputes. More than this, the Bill will help rein in unscrupulous builders and agents. Unlike previous attempts at passing the Bill, this time around, the changes suggested by the Standing Committee have been included, and that will help its passage. Among the changes are the inclusion of commercial real estate in its ambit and the provision for registration of all real estate agents. While land is a state subject, regulating contracts and transfer of property are on the concurrent list, and that is what the Bill seeks to do. The amended bill also covers ongoing projects that have not received completion certificates. Given recent high-profile disputes over developers promising something and delivering something else, the Bill stipulates that promoters will not be allowed to change plans and structural designs without the consent of two-thirds of the buyers in a project.
Making property brokers punishable for non-compliance of the orders of Regulatory Authority and Appellate Tribunals to be set under the proposed law will nip many potential malpractices in the bud. Developers will now have to register their projects and disclose all relevant information including schedule of development works, land status, status of statutory approvals, even the names and addresses of real estate agents, contractors and architects. They will have to pay heavily if there is a diversion of funds or breach of commitments, and many safeguards have also been built in. Builders will have to, within 15 days, deposit 50% of funds collected from buyers in a separate bank account to meet construction costs in order to prevent diversion of funds to other projects. The penalties for non-compliance are quite strict and can include 3 years imprisonment along with fines that can add up to 20% of the project cost. Indeed, if the government does succeed in getting the bill through in Parliament in the current session and if the states play their part; along with the budget proposal of a limit of R20,000 on cash payments for purchase of immovable properties, a solid framework will be in place to streamline the real estate sector.