Cabinet Approves Real Estate Bill 2013, Brings Protection Against Fake Promises & Frauds
PM Modi and the council of Union Ministers in the cabinet has finally given their green signal to the pending Real Estate (Regulation and Development) Bill, 2013. Real estate buyers in India can now be relieved as they will get much needed protection against frauds and fake promises doled out by developers and builders.
This bill was first introduced in 2013 and it only included commercial properties. It was passed by then UPA Govt. but various organizations and consumer groups opposed several clauses and recommended some more changes. A Standing Committee of Parliament on Urban Development was formed to look into suggestions and to incorporate new changes.
Modi Govt. has now approved these amendments, and have added residential projects as well, along with commercial ones. The press release announcing the passage of bill said, “The Real Estate (Regulation and Development) Bill is a pioneering initiative to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects.”
Some major pointers of this bill, which every real estate consumer should be aware of:
– Real Estate Regulatory Authority will be formed for every state and Union Territory which will mandate and regulate the rules pertaining to real estate transactions. And the best part is that all real estate agents, developers and promoters need to be registered with this body. Hence, no more shady transactions and fake promises wherein the buyer is stuck with neither way in nor way out. This is the single most important factor of this bill.
– Government appointed officers and nodal managers would exist to resolve disputes between buyers and sellers of real estate
– 50% of the money received from the buyer needs to be deposited in a bank; solely for the purpose of construction alone
– Any ‘major’ changes to the original design and construction plan of the project needs approval from atleast 2/3rd of all allottees of the project.
– All real estate developers and promoters are hereby notified to make all details of their projects fully public. This includes: “details of promoters, project, layout plan, plan of development works, land status, status of statutory approvals and disclosure of proforma agreements, names and addresses of real estate agents, contractors, architect, structural engineer”
– Real estate agents can only sell those properties which are registered with the regulation authority
You can access the complete; amended Real Estate (Regulation and Development) Bill, 2013 here.
Challenges and Growth of Real Estate In India
Despite excellent GDP growth and increase in consumer spending, real estate in India is reeling under severe losses. 23 listed real estate firms in India has incurred debts of more than Rs 35,000 crore as of 2014, with operative profits of Rs 3655 crore, a little more than Rs 3402 crore in 2013.
The 10 major real estate markets in India: Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Pune, Noida, Gurgaon, Bhiwadi and Mumbai registered a modest growth between 0-5.5% in 2014, and real estate returns are hovering between 6-9%, which is way too less compared to the dynamism which Indian economy is witnessing.
The inventory in 5 major real estate markets in India: Delhi, Mumbai, Bangalore, Chennai, Hyderabad, it will take upto 50 months to clear the existing inventory, with Delhi NCR region needing 86 months!
Such is the bad situation that the super-rich of India are now investing in real estate of foreign market, compared to Indian market.
After the Real Estate Bill 2013 is fully applicable, real estate market in India is expected to improve, and instill more confidence among investors and buyers.