Draft Model Real Estate (Regulation of Development) Act 200_____

In order to promote planned and healthy real estate development of colonies and apartments with a view to protecting consumer interest on the one hand and to facilitate smooth and speedy urban construction on the other; Ministry of Housing & Urban Poverty Alleviation has drafted a draft Model Real Estate (Regulation of Development) Act 200_____. The draft bill can be accessed on the website of the Ministry (http://mhupa.gov.in) under “What is new” ticker.

The draft bill seeks to establish a Regulatory Authority and an Appellate Tribunal to regulate, control and promote planned and healthy development and construction, sale, transfer and management of colonies, residential buildings, apartments and other similar properties, and to host and maintain a website containing all project details, with a view to protecting, on the one hand the public interest in relation to the conduct and integrity of promoters and other persons engaged in the development of such colonies and to facilitating on the other the smooth and speedy construction and maintenance of such colonies, residential buildings, apartments and properties and for matters connected therewith or incidental thereto.

The bill provides for compulsory registration with the Regulatory Authority for development of land into a Colony of plots or construction of a building or conversion of any existing building or part thereof into apartments, for the purpose of marketing all or some of the apartments, except when the area of land proposed to be developed into a colony does not exceed one thousand square meters or the number of apartments proposed to be constructed does not exceed four.

The bill also provides that no promoter shall issue or publish an advertisement or prospectus, offering for sale any plot, building or apartment, or inviting persons who intend to take such plots, buildings or apartments to make advances or deposits without registering with the Regulatory Authority and without first filing a copy of the advertisement or prospectus in the office of the Regulatory Authority. The bill also has provisions for:

a. Responsibility of the Promoter to enter all record or details on the website of the Regulator;
b. Responsibility of promoters regarding veracity of the advertisement or prospectus;
c. No deposit or advance to be taken by promoter without first entering into an agreement of sale;
d. Responsibility of Promoter to take measure for protection and safety of property;
e. Responsibility of the Promoter regarding the account of sums taken from or on behalf of the allottees;
f. Responsibility of the promoter to the allottees during project period etc.

Comments/suggestions on the draft bill were invited from public and other stakeholders till 06.11.2009 through issue of public notice, as also through communications to States/UTs, business chambers etc. Comments from 77 stakeholders have been received. However, States/UTs have not responded in the matter and being reminded.

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5 thoughts on “Draft Model Real Estate (Regulation of Development) Act 200_____

  1. Once this bill comes in to force, this will lead to curb the practise of forfeiting the money of innocent buyer.
    This will also lead to increase in the demand of fresh housing beacuse of transparency.

  2. Some of the additional provisions that the bill should include are as follows.

    – Developers/ builders should not be allowed to open bookings in any form unless each and every permission/ licence has been obtained. Even pre-launch offers should be banned all togehther.
    – Developers/ builders must deposit their share of the contribution towards the project cost into a separate escrow account with a lead banker. Lead banker should be compulsory even if there’s no loan and lead banker’s role and responsibility should be clearly specified.
    – Developers / builders must quote all the rates only per square feet of carpet area. Carper area calculation should be clearly specified. Quoting any area details other than in carpet area terms either verbally or in any other form of communication should be punishable.
    – Developers should not be allowed to separately charge for amenities such as club house, car park and so on which are compulsory for the buyers. They can very well charge higher rate per carpet ft if they can convince that their amenities are better than others’.
    – All other outgoings must be direct between buyer and the authorities. E.g., water/ electricity deposits, VAT, service tax, stamp duty / regn and so on. Buyer should pay to the lead banker, who should pay to the authorities and get receipts immediately for the buyer. Lead bankers’ charges should not be recovered from buyers. Builders should incorporate it in their costing,

  3. A much awaited legislation like the one above brooks no delay. The Real Estate sector needs to be regulated. The Regulatory body will have to discharge a much larger responsibility in terms of controllling /regulating to see that the role of parallel economy is minimised and to encourage the entry of professionals in the real estate sector.

    Another step would be to(1) introduce the system of State Guaranteed titlle in respect of land and houses and (2) computerisation of land records.

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