What Rajya Sabha Committee's Report On The Real Estate Bill Says
The Narendra Modi government's amendments to the Real Estate (Regulation And Development) Bill 2013 have been subjected to much criticism in the past few months. Many, including Rahul Gandhi, the Vice-President of the Indian National Congress Party had accused the bill being pro-builder. On July 30, a Rajya Sabha Committee's report on the Real Estate Bill was tabled in the Parliament. There is a wide agreement that the Rajya Sabha committee's report suggests some measures that are favourable to the home buyers. Even though some argue that the proposals in the report would kill incentives to invest in real estate in India, after the report was tabled in the Parliament, the stock prices of the real estate developers including Oberoi Realty, Godrej Properties and Indiabulls Realty rose. The report argues that the proposed law should ensure the growth of the real estate sector without compromising on the interests of the home buyers.
Which are the key proposals of the Rajya Sabha committee's report?
1. It must be compulsory that all the details of the upcoming projects in India should be disclosed by the builders, making such information accessible to the home buyers.
2. Carpet area should include the net usable floor area of a flat. But, the carpet area must not include the area covered by the external walls and the area under the service shafts, exclusive balcony or verandah and open terrace areas. The carpet area, however, would include the area covered by the internal partition walls of the flat.
3. The interest rates paid by builders who default on their projects should be similar to the interest rates paid by the home buyers on their mortgage loans. (While buying apartments in India, usually, the interest rates which builders pay is much lower than the mortgage loan interest rates of the home buyers.)
4. Builders who default on projects must either serve a three year jail sentence or pay a fine.
5. 50 per cent of the payment builders receive for a project should be kept in an escrow account and should be used for that project alone. Builders will be allowed to spend the rest of the money on other projects.
6.Instead of covering projects of area of 1000 sq m or 12 flats, the new law should cover projects of an instead of 500 sq m or eight flats.
7. A person holding more than two flats in residential project should not be treated as a promoter.
8. Promoters should audit their accounts after six months after the end of every financial year by a practicing chartered accountant.
9. While applying for the registration of any residential project in India, promoters should enclose details of the developer's existing projects. It should also include the details of approvals and land titles and payment dues.