The Union Cabinet on Wednesday approved various amendments to the contentious Real Estate bill, introducing provisions for depositing 70 per cent of the project cost by builders into an escrow account and punishment for violations of the proposed law, meeting key opposition demands.
Reaching out to the opposition, the Cabinet, in its meeting chaired by Prime Minister Narendra Modi, approved a string of amendments to the Real Estate (Regulation and Development) Bill, 2015, aimed at protecting the interest of the buyers and promoting investments in the sector while ensuring transparency.
A key amendment is the provision for depositing 70 per cent of the money received by the builders from buyers for a project into an escrow account, especially created for the concerned scheme, so the builders do not invest a large portion of the money thus raised for other projects. It would also act as a safeguard against uncertainty over a project in the event of the builder backing out.
The real estate bill approved by the previous UPA government had provided for deposit of 70 per cent of the funds raised from buyers into the escrow account but it was reduced to 50 per cent by Rajya Sabha’s select committee which examined the bill.
The amended bill also provides for imprisonment up to 3 years for the builders in case of violations of the provisions of the proposed law and upto one year in case of real estate agents and buyers, according to a senior official of the Urban Development Ministry.
The UPA bill had a penal provision for violations, which was not there in the one brought by the Modi government.
The Congress-led opposition had been insisting on reintroduction of these provision in the amended bill.
Wednesday’s decision has significantly improved the prospects of the bill getting passed during the current session provided Congress allows normal functioning of Parliament.
Another major change approved by the Cabinet includes equal rate of interest to be paid by promoters and buyers in case of default or delays. The provision was earlier tilted in favour of the builders.
The bill envisages registration of real estate projects and real estate agents with a Regulatory Authority, mandatory disclosure of all registered projects, including details of the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer are other features.
Aggrieved buyers can now approach 644 Consumer Courts which are available at district level in the country instead of only the Regulatory Authorities proposed to be set up under the bill, mostly in capital cities, for redress of grievances.
This makes it easy for buyers besides reducing the litigation costs.
The earlier NDA bill provided for resolution of disputes between consumers and builders by consumer court, while the UPA legislation stipulated dispute resolution at the appellate body of the proposed real estate regulator.