Tired of inconsistency in the real estate market? The amended Real Estate Regulatory Bill will bring an end to your woes.

Recently, the Real Estate Regulatory Bill was amended and sent to the Prime Minister’s office for approval. Prime Minister Narendra Modi and his cabinet of ministers have approved the Bill. The amendments were made in order to bring transparency in the real estate market and to protect buyer’s interests. The bill is going to be presented in parliament to implement it as an act. It has been amended after taking suggestions from the Standing Committee of Parliament on Urban Development, consumer organizations, industry associations, and real estate experts. Here are a few salient points that you need to know about the amended Real Estate Regulatory Bill.

Reduction in Balance Amount to Be Kept in Escrow Account

The government has reduced the minimum balance amount to be kept in the escrow account (an account hold by  a third party, in this case the Government), from 70 percent to 50 percent. The amount collected from homebuyers should be deposited in the escrow account within fifteen days.

Developers usually use the balance amount left after depositing the money in an escrow account, to acquire lands or invest in other projects. The reduction in the balance amount to be maintained in an escrow account will allow developers to diversify their real estate portfolios. However, the 50 percent balance amount will still put restrictions on developers from misusing the funds raised from buyers. This will ensure timely completion of projects.

As a buyer, this change may not benefit you, as fund diversions will be higher now.

Protection to Investors of Commercial Properties

Commercial projects will be covered under the amended Real Estate Regulatory Bill. Brokers and agents who don’t agree to comply by the new rules will be punishable once the bill has been passed as an act. This step has been taken to protect investors of commercial spaces.

Under Construction Projects to Be Registered Within 3 Months

The amended bill has made it mandatory for developers to register their under construction properties within three months of its inception. After the registration process is complete, the developer is not allowed to make any changes to the original blueprint of the properties. They have to get the consent of more than fifty percent of customers to be able to make any changes.

The government of the state where the project is located has to establish regulatory bodies within one year of registration of under construction projects. A web-based online registration facility should be set up within one year of setting up the regulatory bodies.

If a developer fails to register their project, they are liable to pay 10 percent of the overall project’s cost as penalty. An additional 10 percent penalty or 3 years of imprisonment will be implied if the developer continues to remain non-compliant. If false or incomplete information is furnished, the developer has to pay 5 percent of the overall project cost as penalty. A continued ignorance of the new rules may result in project cancellation.

Common Regulatory Platform for Shareholders

As per the earlier version of the bill, many consumer complaint or grievances were brought under the jurisdiction of stakeholders. This created immense pressure on them and also increased the list of pending cases. According to the amended bill, consumers can now approach both the consumer court as well as the stakeholders with their problems.

Projects that haven’t received completion certificates will also be covered under this amendment.

Transparent Transactions in the Indian Real Estate Market

Under the amended Real Estate Regulatory Bill, developers have to furnish all details of their project to the public. Information such as promoter details, project plan, layout plan, development work plan, land status, status of statutory approvals, and disclosure of pro forma agreements. Names and addresses of real estate agents, contractors, architect, and structural have to be published too.

The amended Real Estate Regulatory Bill will bring about a much-needed change in the real estate market by ensuring timely delivery of projects and transparency. However, the Bill doesn’t include government bodies that are primarily responsible for the slow approval of projects, which results in project delay.

This article is written by Pravitha Rohit from CommonFloor.com.