“As a sector that lacks clarity and is riddled with legal disputes between consumers and developers, passage of Real Estate Regulatory Bill comes across as much needed wave of hope. Delayed possession of properties has been a major cause of trust deficit in the space and has kept potential consumers away for a long time in case of long term projects. However, State-level Real Estate Regulatory Authorities (RERAs) are now expected to ensure timely completion and handover. Homebuyers will be able to know the status of the land, site and layout plan, schedule for completion, and details on approvals from various government agencies and thereby brining hope of revival.
Further, clarity on carpet area would eliminate a major concern area. The current practice of selling on the basis of ambiguous super built-up area for a real estate project will come to a stop as this law makes it illegal. Carpet area has been clearly defined in the law.
However, the bill has its share of blemishes as well. It includes a provision for developers to maintain 70% of the money collected from buyers in an escrow account towards cost of construction. But what if the cost of land is more than 30% and cost of construction lower than 70%? In large Indian cities, land is very expensive, and this is often the case. When this happens, funds collected from homebuyers may not be utilized, and developers may be forced to raise funds from other sources. But apart from the minor debatable points, the bill would certainly be of great help in protecting the interest of buyers and bring more transparency to the sector and hence would be instrumental in achieving government’s “Housing for All” target.”