A Real estate bill was passed by the Government which was regarded to make the process of Real estate business transparent. On June 5th 2013 the union cabinet approved the bill. Is the bill looking at corruption and bureaucracy associated with getting permissions from the different Government bodies?

1. The Real Estate Bill!
Good or Bad?
For Buyers / For Builders?

2. A Real estate bill was passed by the Government which was regarded to make the process
of Real estate business transparent. On June 5th 2013 the union cabinet approved the bill.
With the elections round the corner, this may be a vital bill to make the ruling party show
to the world that it is towards transparency in the Real estate industry!
However is the bill looking at corruption and bureaucracy associated with getting
permissions from the different Government bodies? Builders in Chennai and other places
of the country are under stress due to pass the cost associated with bureaucracy and
corruption and it needs to be under the scanner.

3. Cons of the bill
Only for Residential properties: What happened to commercial properties? India needs
industrial and technological growth. We need to make Real estate in Chennai competitive
for everyone.
No provision to improve approval transparency and Government bodies are one of the
reasons for delay in implementing a project. If this is not addressed, builders will lose
money and the buyers will pay for that loss. It may increase potential cost for the end
consumer, absolutely bad for the development of Real estate in Chennai.

4. No protection for past projects which were booked before the bill.
Small builders escape the law: Registration with the regulator won't be mandatory for
projects less than 4000 square meter. So, many small developers across metros will
escape from registration and Government regulator's control. In these metro cities,
project areas tend to be smaller due to lack of large land parcel. Will the big builders in
Chennai start smaller projects? May be not but the small builders are the main cause of
worry in terms of quality, affecting the reputation of Real estate in Chennai. The one year
warranty must apply to everyone.

5. Pros of the bill
On time delivery of apartments
This has been a real issue with some builders using time based payment. The construction
progress may be too slow but payments are required on time. Builders who try to take
advantage of naive buyers are taught a lesson. The curious part is, in case there is a long
delay in delivery of apartments to buyers, then the buyer will be entitled to a full refund
with interest. This is pretty good protection for a consumer.

6. Clear and fair disclosures
Did you book a west facing or sea facing apartments for sale in Chennai during pre-launch
but when plan was approved and construction started, you saw that changed? It is very
common to book apartments for sale in Chennai with certain specifications but it changes
over the period of construction. A builder got approved for 7 floors but built apartments in
10+ floors. He had to change the entire design and reshuffled all apartments.
So if you wanted a north facing apartment,
you might be disappointed when such
reshuffling is performed. So now the bill
states that developers need to share project
plans in disclosure which will definitely be
delivered with an apartment. There can't be
any change at a later stage of development by
builder. In case builder is found guilty, then
the builder penalized at 10 per cent of project
costs or jail up to 3 years.

7. Actual Carpet area to be mentioned
Currently buyers are given the super built up area which includes common passage, club
house, etc. How do you know the extent of area that is available for you? Now, with this
bill it's mandatory for the builders in Chennai to declare the actual carpet area of
apartments in promotion activities.
No more pre-launch offers without approvals
Most builders in Chennai offer apartments for sale in Chennai at huge
discounts with pre-launch offer to attract buyers. However, buyers are not informed about
all clearances in the project and risk of delay in delivery due to issue of important
clearances from Government. In this case, builders in Chennai initially start working on
project after getting some clearances and start selling but such projects get delayed or
stuck at later stages due to some hurdles in getting complete clearance. The bill clearly
state that the developers have to get all important clearances before they start selling
apartments.

8. No more diverting funds between projects
It's a common practice among developers to raise funds from buyers in the pre-launch
offer and then utilizing the fund for buying land for other projects or engagements, but
not using it in current project. Now, with this bill it's mandatory to maintain separate bank
accounts for each project and transactions need to be maintained. Diversion of funds from
one project to another will not be permitted. Developers or builders have to put aside 70
percent of the proceeds of a particular project in a separate bank account which will help
to fund the project and leads to complete it on schedule time.
A one year warranty for your building!
In case there is structural defect or deficiency in the
development of building, then this bill allows approaching
builder for after sales service. According to the bill, buyer
needs to inform about the deficiencies within one year of
purchase date. So, developer will be liable to rectify these
defects without further charges.