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Buyers misled? Realty promoters will be jailed
The Union ministry of housing & urban poverty alleviation has refused to dilute the penalties to be imposed on non-compliant promoters in the final version of the Real Estate (Regulation and Development) Bill, despite industry opposition to the concept of sending the offender to jail.
The latest draft legislation, expected to be taken up by the cabinet soon, has proposed up to three years jail or/and a penalty up to a tenth of the estimated cost of the real estate project in question for promoters willfully failing to comply with some key provisions.
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Buyers misled? Realty promoters will be jailed
An earlier version of the draft, put up in the public domain for consultations with various stakeholders, had proposed similar penalties on defaulting real estate promoters, triggering industry-wide protests.
If a real estate promoter gives out false information knowingly to the buyer, the draft has provided for a penalty of up to five per cent of the project cost.
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Buyers misled? Realty promoters will be jailed
Any other contravention of the rules and regulations would also impose a penalty on the promoter stretching to five per cent of the project cost.
The latest draft talks of returning the amount paid by a buyer, along with interest, in respect to an apartment, plot, or a building, if a promoter fails to complete a project on time and give possession as promised in accordance with the agreement.
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Buyers misled? Realty promoters will be jailed
Also, a promoter will not be able to accept more than 10 per cent of the cost of an apartment as advance payment or application fee, without a written agreement.
One significant provision is mandatory registration of real estate projects and real estate agents who intend to sell any immovable property with the proposed Real Estate Regulatory Authority.
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Buyers misled? Realty promoters will be jailed
Public disclosure of all project details will be mandatory.
In addition, real estate companies must compulsorily deposit 70 per cent of the funds received from allottees in a separate bank account, for purposes of ensuring timely completion of projects.
Punitive provisions include deregistration of the project and penalties in case of contravention of the provisions of the Bill.
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Buyers misled? Realty promoters will be jailed
Within a year of the Act coming into place, Real Estate Regulatory Authorities will have to be constituted by the government of each state and Union Territory. More than one authority in a state is permissible.
At the central level, a Real Estate Appellate Tribunal has been proposed.
The legislation is aimed at protecting the interests of ordinary people and home buyers across the country against unscrupulous practices in the sector.
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Buyers misled? Realty promoters will be jailed
After the cabinet approves the Bill, it will be introduced in Parliament. Once an Act, it will be implemented across the country, except in Jammu and Kashmir (where the state legislature has the authority to decide whether or how much to extend).
Although the housing ministry has aimed to introducing the Bill in the current session of Parliament, this may be difficult.
Buyers misled? Realty promoters will be jailed
PROPOSALS IN DRAFT LEGISLATION
Punishment of up to 3 years in prison or/and penalty of up to 10% of the project cost for promoters willfully failing to comply with some key provisions
Penalty of up to 5% of the project cost if a promoter gives false information to the buyer
Refund for buyer along with interest if promoter fails to complete the project on time or give possession according to the agreement
Promoter can't accept more than 10% of apartment cost as advance payment or application fee without written agreement
Mandatory registration of real estate projects and real estate agents with the Real Estate Regulatory Authority
Within a year of the Act coming into effect, Real Estate Regulatory Authorities will have to be constituted in states and Union territories.
Setting up of Real Estate Appellate Tribunal
