The Real Estate (Regulation and Development) Bill was passed in the Lok Sabha on 15 March 2016.
This brings good news to everyone who wants to buy or invest in property. According to CII (Confederation of Indian Industry), the bill aims to protect the rights of buyers through a single window and time-bound clearance system.
According to Chandrajit Banerjee, Director, CII – “The enactment of the Real Estate Regulation Act by both houses of Parliament paved the way for well-deserved and long overdue legislation to protect the rights of consumers, especially of the common man, from occasional delays. .”
The bill intends to protect consumer rights, increase efficiency in transactions, and increase transparency, all with the hope of attracting more investment.
What do the latest developments say?
The government plans to establish a number of RERA (Real Estate Regulatory Authorities), which will help regulate transactions related to residential and commercial projects and timely completion.
The real estate sector is not only important from an economic perspective, it is also involved with 250 other sectors. It even has a socio-cultural importance, especially in the Indian context.
As per the amendments, projects that are at least 500 square meters in area, or more than eight apartments, must be registered with regulatory authorities.
CII hopes that all state governments will soon develop their own guidelines. This would enable time-bound permitting procedures for housing projects with penalties for default, even in the case of ministries and their departments.
Apart from that, the government also plans to provide every Indian citizen with a home by 2022, under the ‘Housing for All’ scheme.
The Court of Appeal (which will act as a watchdog) has also set out terms of punishment for those who violate its orders.
The penalties include imprisonment for up to 3 years in the case of the promoter, and 1 year in the case of real estate agents and buyers.
How will it affect consumers and developers?
The previous law was a godsend for developers, as there was no legal process whatsoever against them if they delayed or failed to complete the project on time.
But the current law ensures that such setbacks will be dealt with decisively. If there is a delay in project completion, the developer will pay the same interest to the buyer as the EMI paid by the buyer to the bank.
For consumers, the portion of their EMI that was used for principal payments, now qualifies for a tax deduction under Section 80C. This reduction is available up to a limit of Rs.1.5 lakh under Section 80C.
How does it affect your EMI?
The new bill doesn’t specifically say anything about EMI rates, but smart shoppers calculate their monthly income and expenses, and plan their EMI accordingly.
Seeking a second opinion, or professional help, isn’t a bad idea either. EMI is offered at different interest rates by different banks. You can use a EMI calculator for home loans as it will give you a quick overview of how to repay your loan.
Even though the ROI (Interest Rate) has been set by the financial authorities, you can go ahead and negotiate the deal that works best for you, as it can help you save quite a bit. So make sure you make the most of your communication skills.
What does the 2016 State Budget offer?
According to this year’s budget, first-time home buyers will be given an additional discount of Rs.50,000. This deduction is given to home loan interest rates for loans up to Rs.35 lakh, given that the value of the property does not exceed Rs.50 lakh.
Currently, interest paid to banks on self-occupied space is subject to a maximum deduction of Rs.2 lakh under ‘Income from Home Property’ under Article 24(b).
What to look out for?
Even though the Real Estate Bill has been passed, it will take time for it to show results on the market. For people who urgently need a new home, you have to comply with existing laws, which is a bit of a hassle.
But if you keep an eye on the market, and have contacts with professionals in the real estate industry, things shouldn’t be too difficult.
If you happen to be one of the victims of fraudulent practices and late builders, you have the right to take legal action. In the past, there have been many instances where courts have sided with buyers. The complaint handling mechanism is very strong in this regard, so don’t hesitate to take legal action.
Because of this, as a consumer you need to be very careful about where exactly to invest your money, to avoid falling prey to house transaction scams. Thoroughly investigate the property, check out the surroundings, talk to people, and keep yourself up-to-date on the market scene. It is also a good idea to keep an eye on the global real estate scenario, as changes in property prices in parts of the world ultimately impact our real estate sector.
It’s important to protect yourself and your hard-earned money from going to waste, especially since buying property is a risky investment.
The Real Estate Bill that was recently implemented is like a breath of fresh air for home buyers. This article goes into the fine detail of how it will benefit you.