The Union Cabinet has approved 20 major amendments to the real estate regulatory bill that seeks to protect home buyers as well as help investments in the real estate industry grow.
These changes were based on the recommendations of the select committee of Rajya Sabha that had examined the bill pending in the upper house of the Parliament.
The updated bill now mandates projects on 500 sq metres of area or with eight flats to also be registered with the regulatory authority instead of 1,000 sq metres proposed earlier, bringing in a larger number of projects under the regulator’s ambit.
Builders will now have to deposit at least 70 per cent of the sale proceeds, including land cost, in a separate escrow account to meet construction cost. Earlier proposal was 50 per cent or less of sale proceeds.
Among the changes, builders will now have to pay equal rate of interest in case of default or delays as home buyers. What has also been changed is the liability of builders for structural defects that has been increased from the earlier two to five years now.
Carpet area has now been clearly defined to include usable spaces like kitchen and toilets to make it clear. Garage is now to be kept out of the purview of definition of apartment and is separately defined.
Formation of allottees associations is now mandatory within three months of allotment of majority of units in a project so that buyers get to manage facilities in the housing project.
The bill now allows aggrieved buyers to approach 644 consumer courts which are available at the district level instead of only the real estate regulatory authorities proposed to be set up under the bill, mostly in capital cities, for redressal of grievances.
The regulation has brought commercial real estate projects under the ambit of the bill; made the provisions of the bill applicable to all existing projects wherein sales are still in progress, and put in place a system that would require consent of two thirds of the buyers in a project for changing project plans.