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Real Estate Regulatory Bill Research Team | Posted On Wednesday, June 03,2015, 05:45 PM

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Real Estate Regulatory Bill



You must have heard the famous saying ” Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.”

Having a roof over your head involves a lot of sacrifice. A home in a metro city is very costly. Availing a home loan and paying EMI’s for many years can test your finances to the limit. However the joy of owning your own home beats everything.

“If you don’t own a home, buy one. If you own a home, buy another one. If you own two homes, buy a third. And, lend your relatives the money to buy a home.”                                                                                            - John Paulson

Constructing your home in India comes with its own share of problems. You pay your hard earned money or avail a home loan from the bank to pay the builder to construct your dream home.

The wait till your home is constructed can take forever. The builder might stop the construction of your home midway and ask for more money. Your home now resembles an ancient Egyptian ruin. Many times it might take even 10 years for your dream home to be constructed.

See Also: What is E-way bill?

Fortunately the Government is passing the Real Estate Regulatory Bill where a new regulator is created to help you in your fight with the builder….

No more delays in the construction of your dream home….

Those fancy prelaunches:

Builders advertise their projects even before they get all the necessary clearances from the Government. Your builder might not have permission to construct your home. That doesn’t deter the builder from making all sorts of false promises.

After the real estate bill is passed:

  • All projects constructed by a builder which are larger than 1,000 square meters (Approximately 9,000 square feet) or have more than 12 apartments in them have to be compulsorily registered with the new regulatory authority.
  • The builder has to provide all the details such as the building layout plan, commencement certificate showing he has permission to construct the building on the land, names of the contractors involved in the project and so on.
  • The builder will have to give a timeframe (Time within which the project will be completed) and adhere to (keep this timeframe).You (Buyer) has the right to ask for a timeframe within which the builder has to complete each stage of the construction of your home.

Only projects which have all the necessary clearances and have been registered can be sold by the builder.

This just might mean an end to all those flowery advertisements in which your builder makes false promises on the location and appearance of your home and the amenities (facilities) in those prelaunches.

What happens if your builder breaks the rules?

If your builder does not register the project, he can be fined up to 10% of the cost of the project. The real estate regulator can even have his registration cancelled. This will surely make your builder rethink before delaying your project.

The Builder lures you with false promises….

The builder promises you a huge area/space for your new home and charges you a huge amount when he lures you to buy his project.

The builder charges and promises you a huge carpet area (Think the area in your home where you can spread your carpet) in your apartment.

The shocker:

The builder actually charges you for the super built up area which includes the staircase, lobby, garden, swimming pool, lifts and pretty much everything the building includes.

After the real estate bill is passed:

The builder can charge you only for carpet area. So now you pay price per square foot for the carpet area.

Why does your builder delay the construction of your home?

Your builder collects money in advance from you and several other customers to construct the apartments in the project.

This is not the only project/construction he has. Your builder might have several other projects which are pending and uses this money to complete those projects.

The builder might need to launch a few more projects (Think prelaunches) to collect money from other customers before your dream home is completed.

The builder delays your dream home maybe even up to 10 years before he gets the money to complete the construction.

After the real estate bill is passed:

The builder needs to maintain at least 50% of all the money received in an escrow account which is used to fund only the construction of that project.

This means most of the money you pay goes towards the construction of only your apartment (that very project) and not some other project of the builder.

Is the builder the boss?

Your builder promises you something and delivers something else. Random changes are made in the building layout plan. A wall is shifted here or there without asking you.

If your builder underestimates the cost of the project he simply modifies the design and you do not get what you pay for.

After the real estate bill is passed:

If the builder changes the plans of the structure or changes any of the amenities promised he needs at least 2/3rd   of the customers in the project to approve of it.

This means you and 2/3rd other customers need to approve of any changes made by the builder in the building layout plan or amenities offered.

You need to remember that in your battle with your builder you are no longer alone. The newly formed real estate regulator might just be the help you so badly need.

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