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The Cabinet has approved the Real Estate (Regulation and Development) Bill. It provides for setting up a regulator for the realty sector and having provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly. The housing and poverty alleviation ministry intends to introduce it during the monsoon session of the Parliament.
The bill will make it mandatory for developers to get themselves registered with the Real Estate Regulatory Authority to be set by respective states. All such builders -- developing a project where the land exceeds 1,000 sq metre -- will have to register themselves with the authority before launching or even advertising their project. Not doing so will invite up to a maximum three years imprisonment or fine of up to 10% of the total project cost.
It also aims to make it mandatory for a developer to set aside half the money collected from buyers to a separate bank account for every project, to ensure money raised for a particular task is not diverted.
The bill also has strict penal provisions for builders who default on contractual agreement or deviate from layout plan. There will also be a two tier system in place to ensure redressal of buyer’s grievance – a regulatory authority at state and an appellate tribunal. This is a crucial issue as presently, except for going to the civil courts which is a time consuming process, there is hardly any redressal mechanism for buyers.
