Provisions and Impact - Real Estate Regulatory Bill

The Real Estate (Regulation and Development) Bill of India, 2013 that was tabled in Rajya Sabha on 14th August, 2013 has been referred to a standing committee for discussion and review. Our analysis on the draft bill indicates that it is an important step forward to promote consumer awareness and bring in transparency.

 We do an Analysis on the Provisions and the Impact as below.

No developer shall offer area for sale in any real estate project, without registering the project with the Real Estate Regulatory Authority. Impact Ban on pre-launch sales will reduce the ability of the developer to accelerate cashflows and also undertake newer projects. Hence, it will lead to reduction in supply. It would also affect investor demand negatively.

Mandatory for a developer to maintain a separate bank account for every project to ensure that the money raised for a particular project is not diverted elsewhere. Developers would have to keep aside 70 percent, or below, as prescribed by the authority. Impact As the percent to be kept aside is to be prescribed by the concerned state authorities, it will vary on a state to state basis.

Developers will be barred from collecting money from buyers before obtaining all necessary permits to start construction on the project. Builders cannot take more than 10 percent of the advance from buyers without a written agreement. Impact As the 'written agreement ' is to be defined by the relevant states, the need of a registered agreement may be circumvented.