Nisardel

Hii All,

The government is at least waking up to the ordeal and sufferings of poor investors.

A draft bill on the much-awaited real estate regulator that will protect the interest of home buyers by ensuring a transparent and healthy real estate sector has drawn the ire of developers. “The government is trying to play nanny to the home purchaser,” said Kumar Gera, chief of the Confederation of Real Estate Developers’ Associations of India (CREDAI).

According to the draft, a builder will have to register a project with the regulator before he can market the properties. For this, the builder will have to submit a documentary proof of land ownership and the mandatory licences to the regulator for registration.

Once verified, the entire information about the project will be available on the regulator’s Website that will be accessible to everybody. The regulator will also scrutinise the advertisements and names of brokers. This process will ensure the legitimacy and the viability of the project, ending the current practice of realty firms launching projects without land ownership or mandatory approvals that leads to buyers getting stuck with inappropriate or illegal projects. “The proposed law will protect home buyers from fraudulent builders,” said Ajit Krishnan, partner for real estate at Ernst & Young.

However, developers don’t agree. “This draft has been prepared by people with good intent but with no knowledge of the nuances of the business,” said Mr Gera, who is also the chairman of Pune-based Gera Developers. If the proposed regulator gets all the proposed powers, a property buyer would know exactly what he is buying. Importantly, the draft bill prohibits a builder from accepting an advance from a home buyer before the sale agreement is signed. At present , builders force buyers to pay 20-30 % of the cost of the property before making a sale agreement.

Many times, a flat allotted by this process is completely different from what the buyer had initially understood from the developer or his broker. “It’s a good idea to have a sale agreement in place at the time of the first instalment, which will help both parties know what is on the table,” Mr Gera said. To make the builder accountable, the draft suggests that he will have to submit a bank guarantee of 5% of the total cost of the project, which will be encashed by the regulator if the builder does not complete the project on time or violate a condition that has been agreed upon in the agreement.

In case a builder is unable complete a project on time, the allottee can ask for a full refund of the amount he has paid along with an interest. The regulator will then take over the incomplete project and appoint another agency to complete the project by encashing bank guarantee and recovering the balance amount from the builder and/or allottees. The bank guarantee will push up the cost of the project and the provision of taking over incomplete project is ‘completely impractical’ , Mr Gera said.

The draft bill also addresses the concern of the home buyer on the cancellation of an allotment. If a builder unilaterally cancels the allotment, he will have to refund the entire amount along with interest . At present, developers generally forfeit a disproportionately-large percentage of the total amount paid by the buyer if the sale deed is cancelled on the buyer failing to make timely payment. Significantly, the draft bill also mandates the builder to keep a separate bank account for each project. “This will prevent promoters from speculating with the cash collected from customers. However , at the same time, it will also not allow a promoter to take away part of his profit till the project is completed ,” Mr Krishnan said.

sirfzia

Thats very good and it will help to increase credibility among buyers

Nisardel

The government is planning to table the bill in the winter session of the parliament...Lets wait and watch.

amitbawa1

is there any law requiring registration of Brokers in India...

Nisardel

Not yet Mr Bawa. It all depends on the success of the RE Regulator bill in Parliament.

Venkytalks

The RE mafia is trying to scuttle the RE regulations proposals as detailed below:


The law is designed to bring the property industry under the control of a regulatory authority and create a tribunal to deal with complaints.

The government claims it will make the real estate markets more transparent and protect buyers and investors.

What does the bill propose?

1. Require developers and real estate agents and brokers to be registered and they will be rated according to performance.

2. Those that violate the new regulations face stiff penalties.

3. Anyone starting construction or development of land without registration could be jailed for up to three years and face fines related to the cost of the project.

4. Developers will need to submit a bank guarantee of 5% of the total cost of the project which will be encashed by the regulator if the project is not completed on time or violates the rules.

5. Making sure that no deposit is taken without an agreement of sale, no mortgages to be issued without consent and that all developments adhere to plans and specifications.

6. Developers will have to register a project with the regulator it can be marketed and to this various documents including proof of land ownership and the mandatory licences will need to be provided to the regulator for registration.Once verified, the entire information about the project will be available on the regulator’s website that will be accessible to everybody.

7. The regulator will also scrutinise the advertisements and names of brokers.

8. Prohibits a developer from accepting an advance from a home buyer before the sale agreement is signed.



Crooked developers are against the bill and are in favour of malpractices.

This draft has been prepared by people with good intent but with no knowledge of the nuances of the business,’ declared Kumar Gera, chief executive of the Confederation of Real Estate Developers’ Associations of India (CREDAI) .


1. force buyers to pay 20 to 30 % of the cost of the property before making a sale agreement.

2. against the proposal that developers will need to submit a bank guarantee of 5% of the total cost of the project which will be encashed by the regulator if the project is not completed on time or violates the rules.

3. against the suggestions that if a developer cannot complete a project on time, the allottee can ask for a full refund of the amount he has paid along with interest and the regulator will then take over the incomplete project and appoint another agency to complete it.




We must support the implementation of the regulation proposal as it exists.

We must protest and resist the efforts by the RE mafia to scuttle vital and excellent proposals.

mav123

Does any one know when this bill is likely to get enforced, if at all? Anyone knows what is happening on this front?

tilak83in

This Bill will be taken up in the Winter Session of the Parliament

AJ2008oo

would be interesting to see how the politicians protect their interests

AJ2008oo

that is illegitimate interests at the cost of tax payers and common man