Real Estate Bill, need of the day

Real Estate Bill, need of the day

The Real Estate Bill passed by Parliament will hopefully bring in major improvements in the working of a sector which is important for the economy and for millions of people who engage with it. It is a welcome development that the political acrimony that had marked the functioning of Lok Sabha and Rajya Sabha did not affect the passage of this bill. All parties came together to pass the bill in the two Houses. The opposition, as much as the government, deserves praise for enacting a key legislation. It is in fact a legacy from the previous government. It has gone through a lot of public debate and parliamentary scrutiny and undergone many changes in the course of time. The bill is expected to bring some order, transparency and good practices in a sector which is not known for them.

Housing demand has been steadily increasing and will further increase in the coming years. But home buyers and aspirants did not have any specific legal defence and protection, except the Consumer Protection Act, against rampant malpractices. This law fills that gap. Developers will now be made accountable for their promises and actions. Broken promises, deviations from plans, delays and other violations of contract are common in the sector. All houses above a particular size will have to be registered, changes in plans will need consent of home buyers and many terms like carpet area will have to be clearly defined. Contracts will have to be standardised, documents will have to be placed in the public domain and all clearances will have to be procured before houses are offered to buyers. Diversion of funds from one project to another will be difficult when 70% of the money collected from buyers has to be deposited in separate escrow accounts. All in all, the most common malpractices in the sector have been taken care of and safeguards built against them.

Importantly, a regulatory mechanism is proposed to ensure that these provisions are enforced effectively. There will be regulators at the state level and an appellate authority. The credibility of the regulator is important for the success of the legislation. Land is a state subject and the responsibility to implement the legislation rests with the states. Some laws at the state level may need changes also. Governments will have to take the initiative to implement the provisions of the bill. Many who know the political links of the real estate sector will have apprehensions about that. But the home buyer is now more confident, and Parliament, after a long time, has passed a legislation which will be widely welcomed by many.

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