India's Union Cabinet passed a bill yesterday establishing a regulator for the real estate sector, a move expected to provide transparency and increase confidence for home buyers.
The Real Estate Regulation and Development bill has lingered in the government for years. Tuesday's approval by the Cabinet would require developers and builders to follow a wide range of new rules designed to protect property buyers.
The bill, which still needs to be approved by Parliament, would force developers to acquire all necessary permits and clearances before launching sales for projects. Builders will also be required to specify a time frame for completion of a project and offer refunds with interest to buyers if there are delays, reports the Wall Street Journal.
Developers also will have to keep 70 percent of funds received for a specific project in a separate bank account to ensure money isn't used for other projects or to pay back debt.
Another component of the bill would deter builders from using misleading advertisements by implementing a penalty of up 10 percent of the project's cost for the first offense and jail time for repeated offenses.
Every state will need to create a real estate regulatory authority to make sure the bill is enforced.