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A parliamentary committee on the Real Estate (Regulation and Development) Bill, 2013 has recommended all real estate projects over 500 sq. m or eight flats be brought under the purview of the Bill.
Currently, the Bill has proposed projects covering 1,000 sq. m or more than 12 flats be registered with the regulatory authority.
The select committee on the real estate Bill, in its report tabled in Rajya Sabha on Thursday, also recommended that 50 per cent of payments made by homebuyers for a real estate project be kept in a separate account, and used for that specific purpose only, while the rest can be spent on other projects. It has retained all the penal provisions for defaulters in the said Bill, including fine for the first offence and three-year imprisonment for subsequent violations.
In April this year, the government had cleared amendments to the real estate Bill, paving the way for the much-awaited regulator in the residential real estate industry. Commercial real estate sector was also been brought under the ambit of the Bill. The Bill was introduced in the Rajya Sabha on August 14, 2013, and referred to the parliamentary standing committee on urban development, which gave its recommendations. After the revised Bill was tabled in the Rajya Sabha in May, it was referred to a select committee.
The real estate sector has been devoid of any kind of regulation until now. The Bill assumes importance in the wake of rising consumer complaints against developers for delaying projects by over 4-5 years.
The Bill aims to establish the real estate regulatory authority (RERA) for regulation and promotion of the real estate sector, and to set up an adjudicating mechanism for speedy redressal of disputes. It also aims to establish the appellate tribunal to hear appeals against the decisions of the RERA.
The panel's report also said that promoters should get their accounts audited within six months after the close of every financial year by a practicing chartered accountant. The real estate development beyond town planning area may be brought under the ambit of the Bill. It also redefined carpet area, saying it means the net usable floor area of an apartment, excluding the area covered by the external walls and that under-service shafts, exclusive balcony or verandah and open terrace areas, although it would include the area covered by the internal partition walls of the apartment.
The Bill, which has been in the making since 2009, also mandates developers to deposit 50 per cent of the money collected from buyers in a project within 15 days to a separate bank account to be used for construction of that project. However, this is less than what was formulated by the previous UPA government, where about 70 per cent of the amount had to be kept for construction of that project.
Developers, both in residential and commercial sectors, will be required to register their projects with the regulatory authorities to be set up, and they will have to mandatorily disclose all information regarding the promoters, project, layout plan, schedule of development works, land status, status of statutory approvals, amongst others.