1 Q : Why need for regulation in real estate
sector’?
Ans:The real estate sector plays a catalytic
role in fulfilling the need and demand for housing and infrastructure in the
country. While this sector has grown significantly in recent years, it has
been largely unregulated, with absence of professionalism and
standardization, and lack of adequate consumer protection, which has
constrained the healthy and orderly growth of the industry.
Also,
the need for regulating the sector has been emphasized in various platforms,
forums, and media reports. This view has also been strongly reiterated by the
Ministry of Consumer Affairs, the Competition Commission and Tariff
Commission, in recent times.
2. Q : What are the most important provisions of the
Bill?
Ans: The proposed Bill applies to residential real
estate i.e. housing and any other independent use ancillary to housing.
However, it is important to know that the Bill only intends to regulate
‘transactions’ i.e. buying and selling of residential real estate, and does
not intend to regulate ‘construction’ which is the domain of States/ULB’s.
As the Bill is aimed
at infusing the much lacked, transparency in the sector, it provides to
mandatory Public Disclosure of all project details, with specified functions
and duties of promoter.
The Bill provides for
establishment of Real Estate Regulatory Authority and Appellate Tribunal for
a speedier dispute redressal mechanism
One of the novel provisions
are the registration of real estate agents, which have hitherto been
un-regulated, with clear responsibilities and functions, which would lead to
money trail and curb money laundering.
And like all
regulatory Bills the Bill provides for Punitive Provisions to ensure
compliance and to enforce the provisions of the Bill. Punitive provisions
include de-registration of the project and penalties are provided in case of
contravention of the provisions of the Bill or the orders of the Authority or
the Tribunal.
3. Q : Some people are
calling it a populist move, realtors' body CREDAI has said the proposed law
should govern all stakeholders of the industry and not only the developers?
Ans : There has been a
crying need for a real estate regulator, on the lines of telecom, securities,
insurance, electricity etc. In fact on the Regulatory Index India is ranked
quite low, in the sector, which has prevented domestic and foreign investment
into the sector, which could have contributed to enhanced activity, and
increase in GDP growth.
The
Bill regulates ‘transactions’ in the sector, and thus all the stakeholders
involved in the ‘transaction’ i.e. the promoter/seller, the allottee/buyer
and the real estate agent, all three are regulated under the proposed Bill,
with specified functions and duties.
The
Bill does not regulate ‘construction’ which is the domain of States/ULBs. The
main concern of the developers is the need for a single window system for
project approvals/clearances, towards which my Ministry has constituted an
Expert Committee, which is also represented by industry bodies, which would
recommend to the States to implement single window system.
As
far as the Real Estate Bill is concerned its remit is limited to
transactions, and thus regulates all parties involved in it.
4. Q : The Real Estate Regulatory Bill that seeks to
bring transparency and accountability in the realty sector contention that
prices would rise by 30 per cent once this Bill is passed in the Parliament?
Ans: This is not true, and
from where have such estimates come. The Bill is aimed at consumer
protection, by creating an online system for information sharing so that
there is mutual trust between the developers and the buyers, and projects
implemented in time.
The
enactment of the Bill will lead to enhanced activity in the sector, leading
to more housing units being supplied to the market. It will bring in the much
needed confidence to infuse more investment and in turn to stabilize the
prices of houses being sold.
The
Bill works for the benefits of consumers and also for the benefits of
promoters, and for the overall benefit of the sector.
5. Q: Delay due to approval from government agencies. Why only to
residential projects and commercial real estate property is not considered
under this regulation?
Ans: On
the delay due to approval from government agencies, The Ministry of Housing
& Urban Poverty Alleviation is advising the States to follow a single
window model for project clearances, but that’s an exercise beyond the
provisions of the Bill.
One
point often missed is that, the proposed Bill only regulates the sale of
residential real estate, and not its development. The promoter is free to
carry on development, but what the Bill provides is that he can only sell
after all approvals are in place and he has registered his project with the
Regulator under the Bill. And the registration requirements under the Bill
are on a real-time basis, which does not lead to another layer of approvals,
as are made out to be.
Limiting
the application of the Bill to residential properties would keep the focus of
the Regulator, and the need for consumers too is in that part of the sector.
6. Q: The projects, which are already built or are
in construction Registration with the regulator won't be mandatory for
projects less than 4000 square meter. So, many small developers will escape
from registration and government regulator's control?
Ans: The initial draft had provided for
4000 square meters, which has now been reduced to 1000 square meters or 12
apartments, whichever is applicable, after extensive consultations with the
States and other stakeholders. Also, the Bill very specifically provides for prospective
regulation.
7. Q: Specifying actual carpet area becomes mandatory Developers are
selling flats on the basis of super built area, which includes common passage
area, stairs and other areas that is 20-30 percent more than actual flat
area?
Ans: What
the Bill says is the disclosure by the promoter of the number of apartments
for sale has to be based on carpet area, and carpet area has been defined.
The buyer should know what he is actually getting and paying for. Concepts
such as super-build up etc. are confusing and the Bill intends to standardize
the requirements .This will substantially reduce the power asymmetry
prevalent in real estate transactions.
Courtesy: (pib.nic.in)
Press Information Bureau
|
Friday 13 September 2013
Frequently Asked Questions on Real Estate (Regulation and Development) Bill, 2013
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