The Real Estate (Regulation and Development) Bill was passed in the Lok Sabha on 15th March 2016.
It bears good news for all those looking to buy or invest in property. According to the CII (Confederation of Indian Industries), the bill aims to safeguard the rights of buyers through a single-window and time-bound clearance system.
According to Chandrajit Banerjee, Director, CII – “Passage of the Real Estate Regulatory Act by both houses of Parliament paves the way for a well-deserved and long-overdue legislation for safeguarding the rights of consumers, especially the common man, against occasional delays.”
The bill intends to protect consumer rights, enhance efficiency in transactions, and boost transparency, all in the hope of attracting more investments.
What does the recent development say?
The government plans to set up a number of RERA (Real Estate Regulatory Authorities), which will help regulate transactions related to residential and commercial projects and their on-time completion.
The real estate sector is not only important from an economic perspective, it is also involved with 250 other sectors as well. It even has socio-cultural importance, specifically in the Indian context.
As per the amendments, projects which are at least 500 sq. metres in area, or more than eight apartments, should be registered with the regulatory authority.
The CII expects that all the state governments will soon chalk out their own guidelines. This will enable time-bound clearance procedures for housing projects with penalties for defaulters, even in the case of ministries and their departments.
Besides this, the government also plans to provide a house for every Indian citizen by 2022, under its ‘Housing for All’ scheme.
The Appellate Tribunal (which will act as a watchdog) has also set up a provision for punishments for those who violate its orders.
The punishment involves imprisonment of upto 3 years in case of promoters, and 1 year in the case of real estate agents and buyers.
How will it affect the consumer and the developer?
The previous law was a blessing to developers, because it didn’t have any sort of legal proceedings in place that was against them if they delayed or failed to deliver the project on time.
But the current law ensures that such setbacks will be dealt with sternly. If there are any delays in project completion, the developer will pay the same interest to the buyer as the EMI being paid by the buyer to the bank.
For consumers, the portion of their EMI that goes into repayment of the principal, shall now be eligible for a tax deduction under Section 80C. This deduction is available for up to a limit of Rs.1.5 lakh under Section 80C.
How will it affect your EMI?
The new bill doesn’t specifically say anything about EMI rates, but smart buyers calculate their monthly income and expenditure, and plan their EMI’s accordingly.
A seeking second opinion, or professional help, is not a bad idea either. EMIs are offered at different interest rates by various banks. You can use an EMI calculator for home loan , as it will give you a brief idea on how to go about repaying your loan.
Although, the ROI (Rate of Interest) has been fixed by the financial authority, you can go ahead and negotiate a deal that suits you best, as this can help you save a little. So, ensure that you make the best use of your communication skills.
What does the 2016 Budget has to offer?
According to this year’s financial budget, first-time home buyers will be provided with an additional deduction of Rs.50,000. This deduction is given on home loan interest rates for loans upto Rs.35 lakh, given that the value of the property does not exceed Rs.50 lakh.
Currently, interest payable to the bank on a self-occupied space is subject to a maximum deduction of Rs.2 lakh under ‘Income from House Property’ under Section 24(b).
What to watch out for?
Although the Real Estate Bill has been passed, it will take some time for it to show results in the market. For people who are in urgent need of a new home, you will have to comply with the existing law, which is a bit of a drag.
But if you’re vigilant in keeping an eye on the market, and have contacts with professionals in the real estate industry, things won’t be too hard.
If you happen to be one of the victims of a builder’s fraudulent practices and delays, you have the authority to take the legal route. In the past, there have been many such instances where the court has favoured the buyer. The grievance redressal mechanism happens to be very strong in this regard, so don’t hesitate to take legal action.
Having said that, being a consumer you should be very careful as to where exactly to invest your money, to avoid falling prey to fraudulent home deals. Investigate the property thoroughly, inspect the surrounding vicinity, talk to people, and get yourself up-to-date on the market scene. It’s also a good idea to keep an eye on the global real-estate scenario, because changes property prices halfway across the world eventually have an effect on our real estate sector.
It’s crucial to protect yourself and your hard-earned money from going down the drain, especially since purchasing property is a risky investment.
The recently-implemented Real Estate bill was like a breath of fresh air to home buyers. This article gets into the intricate details of how it’s going to benefit you.
Sumity Paul
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