The Real Estate Bill: How Consumers Will Benefit

With the aim of providing uniform regulatory environment and to ensure speedy adjudication of disputes and orderly growth of the real estate sector, the Union Cabinet has approved the Real Estate (Regulation & Development) Bill, 2015. The Bill will now be taken up for consideration and passing by the Parliament, the government said.

"It will boost domestic and foreign investment in the real estate sector and help achieve the objective of Government of India to provide 'Housing for All' by enhanced private participation." The Bill, the government says, aims at restoring the confidence of consumers in the sector by institutionalizing transparency and accountability in real estate and housing transactions which will further enable the sector to access capital and financial markets.

Features of the Bill
It will be applicable both for commercial and residential real estate projects. It proposes to establish ‘Real Estate Regulatory Authority’ in States/UTs to regulate real estate transactions.

As per the Bill, it will be mandatory for builders to get their projects and agents registered with the Proposed Authority. Also, the Bill makes the disclosure of all registered projects, including details of the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer mandatory for the developers. Builders will also need to deposit specified amount in a separate bank account to cover the construction cost of the project for timely completion of the project. It proposes establishment of fast track dispute resolution mechanisms for settlement of disputes through adjudicating officers and Appellate Tribunal. As per the Bill, Civil courts are prohibited from taking up matters defined in Bill, however, consumer court will be allowed to hear real estate matters.

The Bill also proposes that Promoters should be barred from changing plans and design without consent of consumer. But there are provisions under the Bill that allow State Government to make rules for the matters specified in the Bill. The Bill also allows the proposed Regulatory Authority to make necessary regulations.

Violation of the provisions of the Bill will lead to builders getting imprisoned for up to three years in case of violations. Real estate agents and buyers can also find themselves behind bars for up to one year in case of violations.

Industry Welcomes It
Getamber Anand, national president of the Confederation of Real Estate Developers' Associations of India (CREDAI), said while builders welcome the changes, the Bill should not be retrospective in nature as it would lead to a lot of confusion and delays. Commercial real estate should be kept out of the ambit of the regulator, he said. Rohit Raj Modi, VP CREDAI, welcomed the Cabinet nod to the Bill but added that that it did not cover the development authorities and municipal corporations that are primarily responsible for granting occupational certificates or completion certificate.

Anuj Puri, chairman and country head at property consultancy JLL India, said the Bill will bring more transparency and accountability into the sector, which will in turn help reduce the cost of capital. This will be good for both developers and buyers.”

Consumer to Benefit
Under the amendments, projects on at least 500 sq metres of area or with eight flats will have to be registered with the proposed regulatory authority, instead of the minimum size of 1,000 sq metres suggested earlier, bringing a larger number of projects under the regulator's ambit. As per the Bill, the builders will have to deposit at least 70 per cent of the sale proceeds, including land cost, in an escrow account to meet construction cost, compared with the earlier proposal for 50 per cent or less, and pay interest to home buyers for any default or delays at the same rate they charge them. Builders will be liable for structural defects for five years, instead of two years earlier.

The Bill clearly defines carpet area by including spaces like kitchen and toilets. Garage has been kept out of the purview of definition of apartment. Formation of residents' association is compulsory within three months of the allotment of a majority of units in a project. The Bill also allows the aggrieved buyers to approach consumer courts at the district level, instead of only the real estate regulatory authorities proposed to be set up under the Bill. The regulatory bodies will mostly come up in state capitals, the Bill said.

Commercial real estate projects also under the ambit of the Bill. The Bill has put in place a system that would require consent of two-thirds of the buyers in a project for changing project plans. As per the Bill, the regulatory authorities will promote a single-window system of clearances for real estate projects. This will likely speed up construction work that now lags because of delays in getting permissions.

Regulatory authorities can grade projects along with grading of promoters, besides ensuring digitisation of land records. They will be required to make regulations within three months of the formation of the regulator as against six months proposed earlier. As per the Bill, the State governments will have to make rules within six months of notification of the proposed Act as against the one year proposed earlier. Allottees shall take possession of houses in two months of issuance of occupancy certificate.

Under the new proposals, additional benches of appellate tribunals can be set up in a state if required for speedy adjudication of grievances.

A new provision has been created for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of the appellate tribunals or monetary penalties, or both.

Under the proposals, tribunals will have to adjudicate cases in 60 days as against 90 days proposed earlier. Regulatory authorities will have to dispose of complaints within 60 days. No such time limit was indicated earlier.

Area of Concern
Non-inclusion of sanctioning authorities in the Bill. “Where do we go if there is a delay in getting approvals such as plinth certificates, occupancy certificate, electricity and water connections, even after the project has taken off. Without these permissions, even a completed project cannot be offered for possession to home buyers," Anand of CREDAI said.

Need to ensure that the proposed regulator should not become one more approval authority. "To begin with, we could have started with large projects and then brought smaller ones under its ambit, as it will be too much of volume to handle at a time when we are starting with it," Puri said.


The permission to approach consumer courts should come in as a major relief for the buyers. There are 644 consumer courts in the country. More avenues for grievance redressal would mean lower litigation costs for the buyers.

Another major change approved by the Cabinet is the proposal to charge equal rate of interest for promoters and buyers in case of default or delays. The provision was earlier tilted in favour of the builders.

History of the Bill
The Real Estate (Regulation and Development) Bill, 2013 was introduced in the Rajya Sabha on August 14, 2013. It was referred to the department related Standing Committee of Parliament on September 23, 2013. The Standing Committee had laid its report in the Rajya Sabha on February 13, 2014 and in the Lok Sabha on February 17, 2014.

The Bill was referred to the Select Committee along with the amendments proposed by the Government as well as by the private members. The Committee held 17 sittings, of which 8 sittings were held outside Delhi. The Committee heard 445 witness in all at different places.