REAL ESTATE REGULATION AND DEVELOPMENT BILL,2013

• 31 per cent of the Indian population, about 377 million live in the urban areas, which accounts for 63 per cent of the Gross Domestic Product (GDP)

• The bill is to fulfill the central government’s aim to improve urban conditions of living and build crucial infrastructure

• This bill focuses on affordable housing and housing for the economically weaker sections in the country

• The government has set itself the target of providing housing for all by the year 2022

• The proposed amendment to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, will give a boost to real estate property development activities in the country

• The Real Estate Bill is meant to introduce transparency in real estate dealings and provide protection to property buyers by imposing certain conditions on what is now an unregulated sector

FEATURES OF THE BILL:

• The Bill regulates transactions between buyers and promoters of residential real estate projects. 
• It establishes state level regulatory authorities called Real Estate Regulatory Authorities (RERAs). 
• Residential real estate projects and the real estate agents dealing in these projects need to be registered with RERAs. 
• Promoters cannot book or offer these projects for sale without registering them.  
• On registration, the promoter must upload details like the site and layout plan, and schedule for completion of the real estate project on the website of the RERA.  
• 70% of the amount collected from buyers for a project must be maintained in a separate bank account and must only be used for construction of that project. The state government can alter this amount to less than 70%. 
• The Bill establishes state level tribunals called Real Estate Appellate Tribunals.
  

ANALYSIS:

• Though land is a state subject the Bill passed by the parliament regulates contracts and transfer of property, both of which are in the Concurrent List.

• Some states have enacted laws to regulate real estate projects. The Bill differs from these state laws on several grounds. It will override the provisions of these state laws in case of any inconsistencies.

• The Bill mandates that 70% of the amount collected from buyers of a project be used only for construction of that project. In certain cases, the cost of construction could be less than 70% and the cost of land more than 30% of the total amount collected. This implies that part of the funds collected could remain unutilized, necessitating some financing from other sources. This could raise the project cost.

• The Standing Committee examining the Bill has made several recommendations. These include: (a) the Bill should also regulate commercial real estate, (b) smaller projects should also be covered, and (c) all real estate agents must be required to register.

• The real estate sector has some other issues such as a lengthy process for project approvals, lack of clear land titles, and prevalence of black money. Some of these fall under the State List.

• The bill seeks to set up a regulatory authority to protect consumers and promote the real estate sector none of which is completely done.

• The Bill recognizes only the promoter; the agent and the allottee and not the other players of the chain that includes the landowner, an attorney who investigates titles, the developer, the architect, the structural engineer, the approving authority, the contractor, the project manager who supervises construction, the agent and the purchaser. This will not bring in the required amount of transparency.