Mixed reaction of realtors regarding the Real Estate Regulatory Bill |
Posted: April 11, 2015 |
The realty sector’s long standing demand was to make a single window clearance of the approvals as currently the developer has to take at least 50 approvals from various authorities in launching a project. The realtors argue that a single window clearance can lower the prices to at least 15 to 20 percent of the price. In places like Mumbai the realtors have remarked that the approvals and the cost for it has been the major reason for the higher prices of the apartments. Not only price the major concern of the buyer which is delay in the projects can also be checked if there is a single window clearance. But the realtors remark that on an overall basis this Bill has infused a fresh life into the real estate sector of the country. Let’s discuss the highlights of the Bill as the cabinet has already given its approval on Tuesday for few amendments and the Bill is on the way to go to the parliament. The Bill brings transparency with the developers which can help the builders to borrow funds at competitive rates which can have a positive impact on the property prices. The Regulatory Bill mandates the builders to keep 50 % of the buyer’s money as deposits within a period of 15 days in a separate bank account which can only be utilized for construction purposes of that particular project. It is likely that developers won’t be too happy with this clause and many under tight financial conditions will find it difficult to manage their businesses. Developers are also not happy with the Bill bringing the commercial real estate sector under its ambit. In criticizing the pros and cons of the Bill many developers argued that the penalty of the developers of imprisonment was also not proper as the nature of the contention was civil and not criminal in nature. Builders have expressed their discontent about the provisions of bringing the projects under Occupation Certificate (OC) as per the Bill. The builders argue that half of the country’s buildings do not have OC. Few further comments that there isn’t a concept of OC in many a place. But on the contrary the proposed law imposed 10 percent of the project cost as penalty for non-registration and another 10 percent had been imposed as a further penalty or three years of imprisonment or both if the developer does not comply with the rules and regulations. For wrong disclosure or non-disclosure, another five percent is imposed as penalty under the proposed regulations. Not only that, the regulatory authority is being conferred with the power of cancelling the registration in case of persistent violations of the law. The Bill proposed that the developers have to register their projects with the authorities and mandatorily disclose all the information regarding the projects, promoters, layout plans, schedule of development plans, status of approvals and land. Ongoing projects have also been asked to be registered within three months. The Bill further proposed that the developers will not be allowed to change the plans or the structural designs of the buildings without the consent of the two thirds of the buyers of the project.
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