The housing ministry will revise the Real Estate (Regulation and Development) Bill after builder lobby groups said a clause in the proposed legislation wasn’t practical.
The ministry is reconsidering a clause requiring builders to use 70% of the money collected for a project for that project to avoid delays, and may lower the limit, said Ajay Maken, housing and urban poverty alleviation minister.
The ministry had received representations against this requirement from the Confederation of Real Estate Developers’ Associations of India (Credai) and the National Real Estate Development Council.
“We want that money collected from buyers by a builder for a project should not be diverted to other projects so that there are no delays,” Maken told reporters on Wednesday.
The Bill seeks to establish a regulatory body for the real estate sector to ensure transparency in property or real estate transactions and protect consumers. A revised version is likely to be presented before the cabinet shortly.
The regulator will also vet agreements between buyers and builders to ensure the developer fulfils all the conditions mentioned in the agreement, Maken said. “We have provisions of penalties and stringent punishments in case of delays by the builder as a part of the Bill,” he said. The housing minister said the aim was not to add another layer of clearance and that registrations by builders with the regulator will be voluntary.
“We are telling the builders to disclose the exact area of a flat on their websites, which they can’t change later, and also to provide the maximum limit of their date of completion of the project,” he said, adding that the authority will only ensure that developers stick to their commitments.
In addition, a developer will be allowed to launch a project only after getting all the requisite approvals, including environmental clearance, clearance of the sanction plan, and civil aviation clearance, Maken said.
David Jones, real estate practice leader at Walker, Chandiok and Co., an audit firm, said the government shouldn’t dictate how an industry should do business. “Dictating how somebody does business is a barrier. Even industry bodies like Credai are already pushing these norms. Telling builders about 70% is going a little too far because you don’t know everyone’s business. The government should focus on principles rather than absolutes,” he said.