Real estate bill passed.. What will be its effect on oversupply noida market...
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  • Good for buyers, bad for builders. Looks at these:

    1. Change of plans and structural designs not allowed without the consent of 2/3rd of consumers of a project.

    2 . Property brokers forced to be more accountable as they have also been made punishable for non-compliance of the orders of Regulatory Authority and Appellate Tribunals to be set under the proposed law.

    3. Developers will have to register their projects and disclose all relevant information including schedule of development works, land status, status of statutory approvals, pro-forma agreements, names and addresses of real estate agents, contractors and architects with the Regulatory Authorities to be set up and comply with the same.

    4. Builders will now not be able to divert funds of their projects as they will have to deposit 50% of funds collected from buyers within 15 days in a separate bank account to meet construction costs. This provision of 50% has been made after taking into account the cost of land needed to be acquired before announcing a project.


    5. Most importantly: Ongoing projects that have not received Completion Certificates so far have also been brought under the purview of the Bill and these projects need to be registered with the Regulator within 3 months, the Union government said in a release.

    I guess all buyers must wait for a bit longer for this bill to become a law before buying a house. Especially since prices dont seem to be rising for 1-2 years anyway.
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  • I welcome to see a regulatory authority. However no where this bill talks about carpet area selling only??

    Also, only 50% fund?? Guess it is been reduced??

    What about Norms like delayed possession and penalty associated with that??

    Something is really fishy!

    Regards,
    Nikku
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  • Any insight on Carpet Area and Area increase at possession?


    Originally Posted by ArpanT
    Good for buyers, bad for builders. Looks at these:

    1. Change of plans and structural designs not allowed without the consent of 2/3rd of consumers of a project.

    2 . Property brokers forced to be more accountable as they have also been made punishable for non-compliance of the orders of Regulatory Authority and Appellate Tribunals to be set under the proposed law.

    3. Developers will have to register their projects and disclose all relevant information including schedule of development works, land status, status of statutory approvals, pro-forma agreements, names and addresses of real estate agents, contractors and architects with the Regulatory Authorities to be set up and comply with the same.

    4. Builders will now not be able to divert funds of their projects as they will have to deposit 50% of funds collected from buyers within 15 days in a separate bank account to meet construction costs. This provision of 50% has been made after taking into account the cost of land needed to be acquired before announcing a project.


    5. Most importantly: Ongoing projects that have not received Completion Certificates so far have also been brought under the purview of the Bill and these projects need to be registered with the Regulator within 3 months, the Union government said in a release.

    I guess all buyers must wait for a bit longer for this bill to become a law before buying a house. Especially since prices dont seem to be rising for 1-2 years anyway.
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  • I think carpet area basis for selling has been retained - its included in the bill. Look at the 2nd table of this TOI coverage:

    Cabinet clears creation of real estate regulator - The Times of India
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  • Originally Posted by nikkugautam
    I welcome to see a regulatory authority. However no where this bill talks about carpet area selling only??

    Also, only 50% fund?? Guess it is been reduced??

    What about Norms like delayed possession and penalty associated with that??

    Something is really fishy!

    Regards,
    Nikku


    70% reduced to 50%.
    Builders are supposed to pay delay penalty is a part of BBA, and i am sure it will be enforceable by the regulatory authority.

    Lets not expect something grand like a system change out of this bill, but at least it will:
    1. Prevent small frauds/misinformation due to provision of mandatory disclosing of information
    2. builders may still stay unpunished but at least small fries - like brokers will not have free run like right now
    3. Carpet area selling basis is a game changer - people should learn how to measure it accurately
    4. 60 days deadline for disposal of cases reduces buyers risk of getting into legal battle
    and i am sure what disappoints the builders most is:
    5. its applicable to ongoing projects as well. Lets wait to see what carpet area is quoted by builder for these projects against the present super area.

    A lot depends upon its implementation, and a lot depends upon how well buyers use the provisions. But certainly market will be forced to be at least a bit more accountable now.
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  • Following pro-buyers things are missing from the BILL :

    - No provision of long pending carpet area only clause.
    - No model draft agreement. (was expected on line of DLF vs CCI).
    - Nothing on delay penalties.
    - If you can only approach Consumer Courts, are they stopping you from going to Allahabad High Court/ SC for grievances under U.P Apartment Act 2010. lately HC/SC have been very harsh on builders.
    - Not sure but nothing about flat area increase and cost escalation.
    - No definition of force manure.
    - Only 50% in escrow is a joke.
    anything else you can think of?
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  • still long way to go ... this needs to be passed by parliament, then all states need to pass a bill based on this, remember land is a state subject . i would assume it will take at least 18-24 months for whole process to complete.
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  • Originally Posted by amitexpert
    Following pro-buyers things are missing from the BILL :

    - No provision of long pending carpet area only clause.
    - No model draft agreement. (was expected on line of DLF vs CCI).
    - Nothing on delay penalties.
    - If you can only approach Consumer Courts, are they stopping you from going to Allahabad High Court/ SC for grievances under U.P Apartment Act 2010. lately HC/SC have been very harsh on builders.
    - Not sure but nothing about flat area increase and cost escalation.
    - No definition of force manure.
    - Only 50% in escrow is a joke.
    anything else you can think of?


    You can find carpet area of all the projects here. Apartments In Noida
    Eg Jaypee Kube - Jaypee Greens Kube Apartments in Sector - 128, Noida
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  • not looking for this.

    What i meant is, have they ensured builders sell only carpet area from now onward.

    Originally Posted by Kalesh
    You can find carpet area of all the projects here. Apartments In Noida
    Eg Jaypee Kube - Jaypee Greens Kube Apartments in Sector - 128, Noida
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  • Originally Posted by amitexpert
    not looking for this.

    What i meant is, have they ensured builders sell only carpet area from now onward.


    To be fair they won't. This does not happen anywhere in the world. Any real estate with common areas is sold at super area. But total lawlessness and malpractices by builders across nation have resulted in massive loss to end users with 30% and above loading.
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  • Originally Posted by amitexpert
    not looking for this.

    What i meant is, have they ensured builders sell only carpet area from now onward.


    The bill does not say that builders can sell at carpet area only BUT it makes disclosure of carpet area by builders mandatory. So one can measure cost as per carpet area, know what is the loading and decide accordingly. Currently i doubt if many buyers are calculating rate per sq ft carpet area. If buyers start asking for it, calculating and considering it - that will become the norm. But then buyers have to - as a group do that.

    What builders are most worried about i think is: it will be applicable for all their ongoing projects as well. So if passed quickly (within 1 yr), builders will be further stuck in an already bad market.

    However, notification of rules, creation of a regulatory body etc should take some more time. If builders want to start with a clean slate, they should now act super fast and finish their projects before the bill becomes a reality. But in case they hurry - that would also mean a further increase in pile of RTM unsold inventories and thus a price fall.

    I think this 1 year is going to be unprecedented in ncr real estate market. Buyers should wait and watch. I already wonder what would they offer for diwali season after already offering mega discounts, cars, foreign trips and studio apartments to lure buyers!
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  • okay, these should clear up a lot of points raised:

    Negative: Funds deposited with escrow reduced from 70 to 50. In essence, half of the monies collected from the buyers can still be diverted by the builder towards acquiring land and other businesses. So bad from 70, but at least 50% d assured!

    Positive: The promoters will be mandatorily required to disclose all information of the project, completion time frame, layout plan, land status, status of statutory approvals etc. This leaves very little room for hiding hard facts.

    Positive: The current bill makes provision for a model buyer-seller agreement and stipulates that the developer agreements will have to be in line with the model buyer-seller agreement set out by the regulator.

    Positive: The bill now mandates that the carpet area of the flats be disclosed and homes cannot be sold on super area, a laudable step towards transparency.

    Positive: The Real Estate Regulator bill mandates that the developer cannot make changes to original plans or the structural design, unless he gets the consent of 2/3rds of the customers.

    Positive: An interesting addition in the modified bill has been that real estate agents have been made punishable. Stories of brokers misleading buyers are common.

    Positive: Last but not the least, there is a provision which also allows respite for buyers and investors who are currently stuck with under-construction projects. All projects which have not received their completion certificates will also be covered, once the bill is passed.

    Source: Opinion: Yes, The New Real Estate Bill Helps You - by Manisha Natarajan - NDTVProfit.com

    As far as timing of its passage is concerned: Government plans to bring the amended Real Estate bill, which seeks to protect property buyers against unscrupulous real estate developers and agents, in Lok Sabha during the second half of the Budget session beginning April 20.

    "It is a priority bill. Our intention is to bring the bill in the second half of the Budget session itself," sources in the Parliamentary Affairs Ministry said.

    Immediately after the Union Cabinet approved amendments to the bill last evening paving the way for regulation of realty business, Parliamentary Affairs Minister M Venkaiah Naidu had tweeted, "Happy that Cabinet approved amendments to Real Estate Bill today. Now it will be taken up in forthcoming session of Parliament.

    Sources in the ministry said though there is a constraint of timing due to short period of the second part of the Budget session and pending legislative business, the "intention of the government is to pass this bill in Budget Session itself."

    Source: Real Estate bill to be tabled in LS | Business Standard News
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  • also the punitive powers have been taken away from the bill...
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  • There is no clause for carpet area disclose. CREDAI will never support this.
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  • the new modified regulatory bill is possibly in favor of developers. let me throw some light;

    - most of the developers project are funded by PE or NBFC's so any sales revenue (100%) are put into escrow for development, therefore it has been welcomed by developers. Developers have a way around this.
    - also you must have read the by-laws applicable as punishment for defaulters - none is gonna secure the consumer.
    - the rules of SRA or any re-development, if not pursued were to be kept under watch as per earlier policies anyway. so what will secure possession on time through this bill?
    - but i still want to be positive and expect something out of this, again like the new DP - " lets wait for more clarity on the Bill "

    Cheers!
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