Real estate bill may be discussed during budget session

The proposed Real Estate (Regulation and Development) Bill is supposed to protect property buyers from unethical real estate firms and agencies. The Bill is likely to be discussed in the coming budget session. According to property experts, a strong legislation would put a restrain on unethical and unscrupulous practices in the real estate industry.

While the penal interest provision could hurt realty players; the Bill if it goes through would indeed in the interest of several buyers - especially the middle class, for whom purchasing a property has been a herculean task (due to skyrocketing prices) and unscrupulous practice adopted by some developers, said Ramesh Prabhu, a consumer activist.

The Bill has been framed under provisions dealing with property transactions in the concurrent list of the Constitution that applies to states, making the proposed legislation more than a model law. The Real Estate (Regulation and Development) Bill has proposed the following, which intends to protect the interest of property buyers:

Real estate developers will have to disclose project details and contractual obligations to ensure transparent, fair and ethical business practices. Hence there could be model agreement which could reduce ambiguities in real estate transactions, which you as buyer may not be familiar with.

Moreover, the regulation will make it mandatory for private developers to register all projects before the sale they sell property to you as buyers. The property shall be registered provided that all necessary clearances have been obtained and all major concerns of the buyers are addressed about incomplete or fraudulent land acquisition.

If the developer fails to declare the status of clearances, the Bill provides for levying a fine that can amount 10 per cent of cost of project or three years of imprisonment. Also ensuring that the developer adhere to timelines, the Bill states that the realty player will have to park 70 per cent of funds in a particular bank account, thereby precluding resources from being diverted and thus safeguarding property buyers.

The Bill also enunciates that developers should sell a residential property on the basis of 'carpet area', instead of the current practice of 'super area', thereby ensuring that buyers get a better deal and transparency (over the how much carpet area you can enjoy) prevails.