The real water shed moment for the real estate sector came on March 15, 2016, with the passing of the Real Estate (Regulation and Development) Bill, (“Real Estate Bill”) by the Lok Sabha. The Real Estate Bill, now notified as the Real Estate (Regulation and Development) Act, 2016 (“the Real Estate Act”) comes as a major relief to all home buyers who are assured statutory protection against unnecessary delays and other safeguards in project construction, thereby reinstilling buyer confidence in the market.
Some of the key take aways from the Real Estate Act include, establishment of a ‘Real Estate Regulatory Authority’ to ensure implementation of a single window system to facilitate grant of time bound project approvals and clearances for timely completion of projects. In addition, the Real Estate Act mandates deposition of 70% of the monies received by the promoter for a particular project in a separate bank account, to be utilized towards the construction and land cost for the project. This requirement is intended to ensure that funds for a particular project are not diverted to be used for other projects, and projects are completed on time.
In order to set into motion the process for implementation of the Real Estate Act, a few key provisions of the Real Estate Act pertaining to the establishment and powers of the Real Estate Regulatory Authority, Central Advisory Council and the Real Estate Appellate Tribunal were brought into force with effect from May 01, 2016, along with miscellaneous clauses pertaining to overriding effect, repeal, application of other laws, power to make rules/regulations etc. The aforementioned streamlined approach of the Government in notifying the provisions of the Real Estate Act will ensure that authorities responsible for implementation of the Real Estate Act, are functional prior to coming into force of the operative provisions requiring compliance on part of the developers and real estate agents.