- Wealth PMS (50L+)
The Union Cabinet has approved a bill to set up a real estate regulator in India. Don’t rejoice yet; to become a law, the bill needs to be passed in parliament and the in-thing nowadays is to disrupt parliament because some minister or the other is not resigning.
The bill requires each state to setup a regulator individually, with a common framework.
Developers will have to register their projects with the state regulator and include site plans, drawings, schedules, obtained registrations etc. They can’t even launch a project if they have not received all clearances.
All brokers need to register. Don’t worry, this doesn’t make them any better. Bankers, Insurance salesmen and mutual funds need to register too – does that make them saints? No, they just have to pay a fee for registration, which they will eventually recover from: you.
Further a “representative” picture of a project in an advertisement will become punishable. This will benefit paper companies, as nearly all brochures of all real estate projects contain stuff that is, well, not real. Repeat offences can lead a developer to jail.
A standard definition of carpet area has been recommended that will be used all over the country and prices will be linked to that definition. Thankfully, this is not the “super built up” area that is currently used, which includes area under your feet, under the walls, the common area, the park, the basements, neighbourhood tea stalls, and parts of other districts. But since this was used to make people pay more for tiny pieces of liveable real estate, you can imagine that carpet area prices will now look much higher.
70% of the Funds collected for a project will need to be escrowed and used only for that project. This gives rise to the question – why 70%? Why not 100%? But this has again been diluted and left to the states, saying that 70% is the maximum, and states can decide the minimum.
Currently the rules only apply for residential projects. There is no stomach to build a regulator for commercial real-estate, it seems.