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After 20 key amendments, cabinet clears real estate bill

After 20 key amendments, cabinet clears real estate bill

The Union cabinet on Wednesday cleared 20 key amendments to the Real Estate (Regulation and Development) Bill with a view to safeguarding property buyers’ interests from unscrupulous realtors by regu-lating the sector while provid-ing for penal measures against defaulting customers, too.

In a slew of “pro-consumer” measures, the cabinet chaired by Prime Minister Narendra Modi amended an earlier clause in the billwhichwillmake it mandatory for developersto deposit 70% of the money collected from buyers in a separate escrow account to meet the project’s construction cost

“This would check develop-ers from diverting funds to other projects and ensure speedy com-pletion of the project for which money has been collected,” a housing ministry official said.

The bill that will now be taken up for consideration and pas-sage by Parliament will cover both residential and commercial real estate. It proposes to set up a real estate regulatory authority (RERA)where developers will have to compulsorily register and dis-close project details before launch.

In another move, the cabi-net decided the rate of interest payable by the promoter or the allottee in case of default and delays will be the same. Also, a developer’s liability to repair structural defects in the sold property has been increased to five years from the earlier two.  

However, considering a demand by builders who had been protesting that the bill was stacked against them, the
cabinet, in a first, introduced a new penalprovision for allottees on failure to comply with RERA orders. Allottees will have to pay up to 5% of the apartment cost or face a year in jail or both for defaulting on payment or any other violation on their part.

The bill had become a political hotpotato afterCongnsssvice-pres-ident Rahul Gandhi attacked the government during Parliament’s monsoon session and charged it with diluting various provisions that harmed the interests of mid-dle-class home buyers.

HIGHLIGHTS OF PROPOSED LAW
■ All commercial and residen-tial real estate projects where the land exceeds 500 sqmt or have eight apartments most register with the regulator. The earlier threshold was 1,000 sqmt or 12 apartments

■ Developer will have to put 70% of the money collected from a buyer in a separate account to meet the con-struction cost of the project. The earlier bill had fixed the ceiling at 50% or less
■ The rate of interest payable by the promoter or the allot-tee, in case of default and delays, will be the same

■ Developer’s liability to repair structural defects has been increased to 5 years from the earlier 2 years

■ New provision for imprison-ment up to 3 years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders.

source : hindustan times

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