Real Estate Act: Regulation of Real Estate Development in India

The Indian housing industry abounds in real estate companies of all sorts, big, small and new. Since there is no regulatory authority to check their functioning, investors are often duped into unreliable transactions by attractive sales strategies and marketing techniques. Disputes related to the escalation of costs, delay in completion of projects, absence of clearance certificates, and non-inclusion of costs for fittings are quite common.

Keeping in view the problems faced by real estate investors, the  Indian government has proposed a model bill called the Real Estate (Regulation of Development) Act, with a view 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 residential buildings, apartments and similar properties.
• Maintain a website containing details of all projects. This will help in protecting public interest, and help keep an eye on the conduct and integrity of builders and promoters.
• The proposed real estate act also calls for establishment of regulatory authorities in Delhi and other states.

Real Estate Act (Regulation of Development): Features

The proposed Real Estate Act includes the following provisions for the benefit of investors:

• It calls for all developers and promoters of housing projects to compulsorily register with the Regulatory Authority before marketing or developing their projects. Failure to register a project can attract jail term or monetary penalty.
• The builder’s registration may be canceled if complaints are obtained about the builder’s violation of legal provisions. 
• Builders will be required to provide details of the number and size of plots, layout plan, carpet area and plinth area of flats, apartments or any other housing complex.
• The proposed legislation also provides for the creation of an Appellate Authority for speedy disposal of cases.
• The bill also seeks to restrict builders from changing plans or inserting charges, as the sale agreement will be considered binding. They will also post information about authorized brokers and dealers.
• Advance payment from buyers without a written sale agreement containing project timeline, payment details and possession date will not be allowed.
• Promoters will not be able to cancel the sale deed unilaterally. If there is sufficient reason to do so, the promoter will have to give a notice to this effect. They will also have to repay investors’ money with interest.
• The bill also casts responsibility on promoters to make available for inspection all documents and information related to a real estate project to the prospective investors.
• Developers also have to provide distinction between carpet area, super area and common area along with the plan and specifications of the project.