India is likely to get a real estate regulatory authority, similar to Dubai’s Real Estate Regulatory Agency (Rera), which will bring transparency into the market and protect consumers in the currently unregulated sector.
Media reports on Wednesday said the Indian union cabinet will be meeting on Thursday to discuss a central law to regulate the growing real estate sector and protect interest of end-users.
The Housing Ministry's draft legislation seeks to set up a “watchdog” for regulation and planned development, which will ensure sale of immovable property in an efficient and transparent manner. The legislation proposes setting up of a Real Estate Regulatory Authority in every state.
Dubai set up Rera in 2007 following a decree by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai.
The real estate agency is responsible for regulating the emirate’s real estate sector, formulating strategies, regulating the activities of companies that manage residential compounds, as well as the activities of real estate brokers and the Owners Associations.
Rera has been empowered to issues rules and regulations that qualify activities of brokerage, lease contract registration and certification, as well as issues license for real estate development entities.
The Real Estate (Regulation and Development) Bill, having got the nod from the Indian Law Ministry, seeks to stop unscrupulous real estate developers from fleecing consumers.
The draft legislation also provides punishment for selling a project without registration with the proposed regulator. All developers or builders working on a project, where the plot exceeds 1,000 square metres, will have to register themselves with the regulator before launching - or even advertising - the venture. Any violation will attract a maximum of three years' imprisonment or a fine of up to 10 per cent of the project cost or both.
States have been given freedom to change the limit, an unnamed official told Deccan Chronicle.
Realtors will have to submit project details - approved layout plan, timeline, cost and sales agreement proposal - to the regulator.
Besides, it will be mandatory for builders to fulfill disclosure clause to get permission from the regulator to advertise the project.
The bill proposes imprisonment of up to a year or fine extending to five per cent of the project cost for violation of contractual conditions. The regulator will comprise a chairman and two members who will be appointed by the state governments.
Rera has already issued a number of laws and regulations to make the market place more transparent. The Dubai Land Department, Rera’s parent organization, is currently working on introducing a real estate investor protection law that aims to provide protection to end users to even allow them to get full refund if the developer fails to fulfill contractual obligations.