New Delhi: The Centre is likely to introduce a bill in the monsoon session of Parliament to protect consumers’ interests against dubious operators in the real estate sector.
The Real Estate (Regulation and Development) Bill 2011, prepared by the Housing and Poverty Alleviation (HUPA) Ministry intends to promote planned development of real estate and protection of public interest among others.
Even as the real estate sector is estimated to contribute 9 per cent of GDP, the rapid growth is largely unregulated leading to rampant public complaints about fly-by-night operators who take advantage of the vulnerability of the consumers in a deficit housing market.
"The proposed Bill is crucial for regulating the real estate sector in a transparent manner and also to protect the consumers against unscrupulous developers," Ministry sources said, adding that "concerted efforts are being made to introduce it in the coming session (in Parliament)."
According to the draft, developers will need to make public disclosures related to land title, project completion date and other relevant scheme details on the website of the proposed regulatory authority.
The disclosures must be made before launching a project, so that consumers are not taken for a ride at a later stage and the promoters will also have to register themselves with the regulatory authority.
The Bill has been framed with a view to protect consumer interest on the one hand and to facilitate smooth and speedy urban construction on the other.
Since it would be a Central legislation, state-centric issues such as building by-laws, land and municipalities have been removed from the draft.
"The thrust now is on consumer protection against fraud, timely completion of projects by developers and contractual obligations of the builder," ministry sources said.
The Bill envisages setting up of a real estate regulatory authority by the state governments to check the illegal activities of the unscrupulous promoters.
Although the Reserve Bank of India (RBI) had recently issued a warning to developers over inflated valuations of property, the proposed Bill will not cover the valuation aspects in the current draft, leaving it to market forces.
Currently the draft of the Bill has been sent to the Law Ministry for vetting and after that it would be circulated to other concerned ministries including Environment, Consumer Affairs, Urban Development, Finance and Planning Commission before being sent to Cabinet for its approval.