It is heartening that changes in the real estate law to benefit the consumers which were first mooted nine years ago have finally come into force from May 1, 2017. The Real Estate (Regulation and Development) Bill, 2016 was passed by Parliament in March last year but it is a sad commentary on the states that only 13 states and Union territories have ratified it, reflecting perhaps the reluctance of states to let go of the privilege of being wooed by builders and developers with baits of concessions. Some states have diluted the provisions to suit the developers. Nevertheless, the Centre needs to be lauded for bringing in the worthy Act. The states that have notified the rules are Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Maharashtra, Madhya Pradesh and Bihar. The housing ministry had last year notified the rules for five UTs—Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep, while the urban development ministry came out with such rules for the National Capital Region of Delhi. Union housing and urban poverty alleviation minister M. Venkaiah Naidu claims that the Act would usher in accountability, transparency and efficiency in the sector, since it defines the rights and obligations of both the buyers and developers. The developers will now have to get the ongoing projects that have not received completion certificate and the new projects registered with regulatory authorities within three months. But going by the dragging of feet by many states, there could well be a propensity for some to not implement the new law faithfully. Whether the consumer would be king under the new law indeed remains to be seen.
Besides mandatory registration of projects and real estate agents, the Act has many positive features. These include depositing 70 per cent of the funds collected from buyers in a separate bank account for construction of the project which will hopefully ensure timely completion of the project as the funds could be withdrawn only for construction purposes. The law also prescribes penalties on developers who delay projects. All developers are required to disclose their project details on the regulator’s website, and provide quarterly updates on construction progress. In case of project delays, the onus of paying the monthly interest on bank loans taken for under-construction flats will lie on developers unlike earlier, when the burden fell on home buyers. The Act also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter, without any further charge, within 30 days. If the promoter fails to do so, the aggrieved allottee would be entitled to receive compensation. There is provision for imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of appellate tribunals and regulatory authorities. All this adds up to a major plus for home buyers.