Real Estate Bill is Prime Minister’s Gift to the Nation, says Shri
Naidu
The Bill shall have a bearing on the ongoing projects and houses
70% is for both construction cost and land cost to be maintained by
the promoter is a separate account and not an escrow account
Imprisonment Provision for non-compliance, as a last option
Single window approval system is being developed for ensuring timely
completion of housing projects
Lok Sabha today approved the Real Estate (Regulation and
Development) Bill, 2016. The bill seeks to create a set of rights and
obligations for both the consumers and developers and encourage both of them to
live up to the expectations of each other as per the agreement entered into by
both of them.
Moving the Bill pending in Lok Sabha after it got passed in Rajya
Sabha on March 6, Minister of Housing & Urban Poverty Alleviation Shri M.
Venkaiah Naidu clarified the position on the issues such as how the Bill will
be applicable to existing projects; the Rules on setting aside 70% of customer
advances in an escrow account; compulsory approvals prior to project launches,
and payment of similar interest rate to customers as charged from them for
delays will impact launches and increase compliance costs. The clarifications
by the Minister on different issues are as below:
Requirement
to deposit 70% of collections:
- The account to
be maintained by the promoter is a separate bank account
and not an escrow account.
- Also, the
deposit of 70% is for both construction cost and land cost, and if the
land cost has already been incurred the promoter can withdraw to that
extent
- Requirement to
be met for such withdrawals is provided in the act.
- This provision
has only been provided to ensure that project funds are not diverted and
projects are completed on time.
Ongoing
Projects:
- Upon passage
of this Bill existing/ongoing projects would not come to a standstill, as
is being made out by some respondents from the industry.
- The Bill does not provide that the existing projects should stop all
operations until complied with the provisions of the Bill.
- The Bill only
provides that upon the formation of the Regulatory Authorities all
promoters of existing projects, coming within the ambit of the Bill, would need to register and provide and upload
all project details on the website of the Authority.
- A window of 3
months from the date of commencement of the said clause/section has been
given to the promoters for registration.
- The developers
need to to specify the project details of such apartments so that
prospective buyers will make informed choices, project status is known to
all and to ensure that the projects are completed on time.
Imprisonment
Provision:
- Regarding the
provision of imprisonment for any violations of the orders of the
regulatory authorities or the Appellate Tribunal, it is certainly not a
first option but only the last option.
- There are many
regulatory laws in the country with imprisonment provisions under which 3
to 10 years of imprisonment is provided for. Under Securities Act,
Insurance Act and Pension Fund Act, 10 years of imprisonment is provided.
Food security Act has 7 years provision while it is 5 years under
Electricity Act and Reserve Bank of India Act.
- There can’t be
a consumer without a developer and vice versa. Keeping in mind the
importance of developers for mobilization of land and resources for
housing projects, the last option of imprisonment has been kept at 3 years.
Ensuring
timely approvals for housing projects
The act also provides under clause 32(b) for the Real Estate
Regulatory Authority to take up with appropriate government of competent
authority, the creation of a single window system for ensuring time bound
project approvals and clearances for timely completion of projects.
Shri Naidu has said that with a target is to ensure that all
required approvals are given in about a month’s time, he held 7 high level
meetings with the Ministers of Environment, Forests and Climate Change, Civil
Aviation, Defence, Consumer Affairs, and Culture for streamlining such
approvals. All these ministries as a result have taken significant measures to
ensure online and timely approvals. Single window approval system is being
developed to standardize and settle timelines for approvals and use of IT &
GIS for automation of such systems, setting up nodal agency & empowered
committees, Shri Naidu added.
- M/o Civil
Aviation – Coloured Coded Zoning Maps (CCZMs) of 13 major airports
available online, 9 more by June 2016, Automated NOC approval system &
height clearance operational (on 6.1.2016)
- M/o Culture –
Online NOC process notified,handheld APP, heritage byelaws.
- M/o Defence –
Review of Ammunition Storage Policy, LMA’s instructed to share restricted
zone details with municipal bodies. CCZM’s for four defence airports by
April, 2016.
- Model Building
Bye Laws finalized by Ministry of UD in consultation with MoEF & CC.
- MoEF & CC
has agreed to integrate environmental conditions and norms in building
approval process and now included in the Model Building Bye laws by MOUD.
Now it’s up to the States, to adopt this model building by laws and there
shall be no need separate clearance by MOEF up to 1.5 lakh Sq.Mtrs .
- Revision of
National Building Code National Building Code, 2015 finalized after
incorporating MoUD’s Model Building Bye Laws (MBBL).
The Minister assured the industry that with the establishment of a regulatory mechanism there would be greater flow of
investment, both national and foreign, into the sector, resulting in reduction
in cost of borrowing.
The Bill requires project promoters to register their projects with
the Regulatory Authorities disclosing project information including details of
promoter, project including schedule of implementation, lay out plan, land
status, status of approvals, agreements along with details of real estate
agents, contractors, architects, structural engineers etc. Shri Naidu said that
this enables transparent, accountable and timely execution of projects.
The Minister further said that the Real Estate Bill, 2016 enables
the people meet their genuine aspirations of owning a house including those of urban
poor by giving a fillip to affordable housing initiative under which the
Government intends to enable construction of 2 crore by the year 2022 under
Prime Minister’s Awas Yojana (Urban).
Shri Naidu has said that the Real Estate Bill is a gift to the
nation by the Prime Minister. The passage of the bill is an example of Prime
Minister’s commitment to total transformation, added the Minister.
New Delhi
March 15, 2016