OPEN APP
Home >Politics >Policy >Cabinet clears Bill for creating a real estate regulator
Under the proposed bill, builders have to deposit 70% of the money raised for a project in a separate account and use it only for that development. Photo: Ramesh Pathania/Mint (Ramesh Pathania/Mint)
Under the proposed bill, builders have to deposit 70% of the money raised for a project in a separate account and use it only for that development. Photo: Ramesh Pathania/Mint
(Ramesh Pathania/Mint)

Cabinet clears Bill for creating a real estate regulator

The bill aims to protect the interests of home buyers, ensuring fair practices and accountability

Delhi/Mumbai:

The cabinet on Tuesday cleared the Real Estate (Regulation and Development) Bill 2013, which seeks to set up real estate regulators in states to protect the interests of homebuyers, ensure fair practices and accountability, besides fast-track dispute resolution.

The Bill proposes that developers register their projects with state regulatory authorities by declaring their building plans, timeline and other details of a project. This will then be posted on the regulator’s website.

Developers have to declare this information in advertisements related to a project. A misleading advertisement by a developer, with representative pictures and not actual ones, is proposed to be a punishable offence.

India’s real estate and housing sector is largely unregulated and opaque, and home buyers do not have access to complete information.

The builders lobby, however, said it was against the proposed law in its current form.

“We have been opposing the Bill in its current form from the beginning. We are disappointed with the way government is going ahead without addressing our concerns," said Anil Kumar Sharma, president, Confederation of Real Estate Developer’s Association of India, National Capital Region (CREDAI-NCR).

“According to us, said Bill is neither benefiting the consumers nor other stakeholders. If this Bill would have covered other regulatory and approving authorities, then it would have been much beneficial for everybody."

The Bill, initially planned for the entire real estate sector, including commercial real estate, was amended after the urban development ministry objected to the inclusion of commercial real estate, and now covers only residential real estate.

The provision of depositing 70% of the money raised for a project in a separate account and using it for the development of that project has been diluted. This has been replaced by “70% or such lesser percentage, as notified by the appropriate government", under the Bill.

It also says builders can launch projects only after they acquire all clearances.

Brotin Banerjee, managing director and chief executive, Tata Housing Development Co. Ltd, said that while the move was a positive step, the government should also improve self-discipline in some ways, the most important of these being to give project approvals on time and avoid unnecessary delays.

An official from the housing and urban poverty alleviation ministry said the issue of faster clearances for projects is also being addressed by the ministry by working towards single-window clearance for the sector.

The official, who requested anonymity, also said that while the state governments will set up respective regulators, the case will be different only for Delhi.

“In the case of Delhi, the urban ministry will decide the regulatory authority," the official said.

Under the Bill, not sticking to deadlines will attract a penalty and repeat offences will invite a jail term. One or more real estate regulatory authorities will be set up in each state and union territory with specified functions, powers and responsibilities, as per the Bill.

Once the Bill comes into force, there will be a standard definition of carpet area for the entire country, the official added.

Under the proposed Bill, all property brokers must obtain a licence to conduct business.

The official added that the Bill would benefit those who have already bought a house.

“If there is delay and cost escalation for ongoing projects, then the consumers can approach the adjudicating authority (or regulator) to settle the dispute," the official said.

The Bill will provide much-needed transparency in the sector and provide relief to home buyers, experts said.

The Bill proposes that the buyer should have the right to refunds with interest, in the case of delays.

These provisions ensure that buyers cannot be taken for granted by the developers, said Pankaj Kapoor, managing director at real estate research firm Liases Foras, adding that greater transparency will help the market mature and developers will benefit in the long run.

In another decision, the cabinet approved a proposal to instal mobile towers at 2,199 locations in nine states including Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha, Uttar Pradesh and West Bengal, which are affected by left-wing extremism (LWE), identified by the ministry of home affairs.

The project will be executed by Bharat Sanchar Nigam Ltd (BSNL), a government statement said, adding that BSNL has already installed towers at 363 locations. The Universal Service Obligation Fund (USOF) would fund the capital and operating expenditure net of revenue for five years. The maximum outgo from the USO Fund is estimated to be 3,046.12 crore.

Finance minister P. Chidambaram said installation of the towers would be completed in 12 months. The strengthened telecom network will result in increase in penetration of mobile connectivity in the country, especially LWE affected areas and other areas facing security challenges, resulting in affordable and equitable access of communication, information and governance to people.

In another decision, the Cabinet approved the implementation of All India Council for Technical Education (AICTE) 2010 norms, further notified by AICTE “in regard to pay scales and service conditions etc. in the National Power Training Institute (NPTI), for its teachers/faculty members to the extent as applicable in the case of Technical Institutions", the government said.

The implementation of the norms will help in fulfilling mandatory guidelines laid down by AICTE and also increase the standards of education and training, and will lead to protection of public interest and fulfil NPTI’s accountability to the public at large. The financial implication is approximately 1.61 crore to 2.34 crore per year.

With a possible eye on coming elections, the cabinet committee on economic affairs approved the proposal of the ministry of minority affairs for restructuring and its implementation of the Multi-sectoral Development Programme (MsDP) to bring more people under its ambit.

“After restructuring, the MsDP would be implemented in 710 identified Minority Concentration Blocks (MCBs) and 66 towns and cities falling in 196 districts of 26 States and union territories against 90 Minority Concentrations Districts (MCDs) at present in 20 states," a government statement said. “Thus, six more states namely Andhra Pradesh, Chhattisgarh, Gujarat, Punjab, Rajasthan and Tripura will also be covered," it said.

The restructuring will sharpen the focus of the programme on minority concentration areas making the programme address development issues of the minorities in a more effective way, it added.

The cabinet also approved another proposal to expand the scope of labour ministry run Rashtriya Swasthya Bima Yojana (RSBY), which provides for smart card-based cashless health insurance cover of 30,000 per year to families below the poverty line.

With Tuesday’s decision, the government will provide RSBY benefits to rickshaw pullers, rag pickers, mine workers, sanitation workers, and auto rickshaw and taxi drivers. Overall, it will provide additional benefits to more than 8.5 million more workers, costing the government 210 crore in 2013-14 and 420 crore in 2014-15. Currently, 34.4 million workers enjoy the benefits of RSBY.

The proposed food security law was not discussed at the cabinet meeting.

neha.s@livemint.com

S. Unnikrishnan in Mumbai, Prashant Nanda and Moulishree Srivastava in New Delhi also contributed to this story.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close
×
Edit Profile
My ReadsRedeem a Gift CardLogout