Frequently Asked Questions on Real Estate (Regulation and Development) Bill, 2013

Frequently Asked Questions on Real Estate (Regulation and Development) Bill, 2013


1 Q : Why need for regulation in real estate sector’?

Ans:The real estate sector plays a  catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardization, and lack of adequate consumer protection, which has constrained the healthy and orderly growth of the industry.

Also, the need for regulating the sector has been emphasized in various platforms, forums, and media reports. This view has also been strongly reiterated by the Ministry of Consumer Affairs, the Competition Commission and Tariff Commission, in recent times.


2. Q :  What are the most important provisions of the Bill?

Ans: The proposed Bill applies to residential real estate i.e. housing and any other independent use ancillary to housing. However, it is important to know that the Bill only intends to regulate ‘transactions’ i.e. buying and selling of residential real estate, and does not intend to regulate ‘construction’ which is the domain of States/ULB’s.  As the Bill is aimed at infusing the much lacked, transparency in the sector, it provides to mandatory Public Disclosure of all project details, with specified functions and duties of promoter.

The Bill provides for establishment of Real Estate Regulatory Authority and Appellate Tribunal for a speedier dispute redressal mechanism


One of the novel provisions are the registration of real estate agents, which have hitherto been un-regulated, with clear responsibilities and functions, which would lead to money trail and curb money laundering. And like all regulatory Bills the Bill provides for Punitive Provisions to ensure compliance and to enforce the provisions of the Bill. Punitive provisions include de-registration of the project and penalties are provided in case of contravention of the provisions of the Bill or the orders of the Authority or the Tribunal.


3. Q : Some people are calling it a populist move, realtors’ body CREDAI has said the proposed law should govern all stakeholders of the industry and not only the developers?

   Ans : There has been a crying need for a real estate regulator, on the lines of telecom, securities, insurance, electricity etc. In fact on the Regulatory Index India is ranked quite low, in the sector, which has prevented domestic and foreign investment into the sector, which could have contributed to enhanced activity, and increase in GDP growth.


The Bill regulates ‘transactions’ in the sector, and thus all the stakeholders involved in the ‘transaction’ i.e. the promoter/seller, the allottee/buyer and the real estate agent, all three are regulated under the proposed Bill, with specified functions and duties.


The Bill does not regulate ‘construction’ which is the domain of States/ULBs. The main concern of the developers is the need for a single window system for project approvals/clearances, towards which my Ministry has constituted an Expert Committee, which is also represented by industry bodies, which would recommend to the States to implement single window system.


As far as the Real Estate Bill is concerned its remit is limited to transactions, and thus regulates all parties involved in it.


4. Q : The Real Estate Regulatory Bill that seeks to bring transparency and accountability in the realty sector contention that prices would rise by 30 per cent once this Bill is passed in the Parliament?

Ans:  This is not true, and from where have such estimates come. The Bill is aimed at consumer protection, by creating an online system for information sharing so that there is mutual trust between the developers and the buyers, and projects implemented in time.


The enactment of the Bill will lead to enhanced activity in the sector, leading to more housing units being supplied to the market. It will bring in the much needed confidence to infuse more investment and in turn to stabilize the prices of houses being sold.


The Bill works for the benefits of consumers and also for the benefits of promoters, and for the overall benefit of the sector.


5.   Q: Delay due to approval from government agencies. Why only to residential projects and commercial real estate property is not considered under this regulation?

Ans:  On the delay due to approval from government agencies, The Ministry of Housing & Urban Poverty Alleviation is advising the States to follow a single window model for project clearances, but that’s an exercise beyond the provisions of the Bill.


One point often missed is that, the proposed Bill only regulates the sale of residential real estate, and not its development. The promoter is free to carry on development, but what the Bill provides is that he can only sell after all approvals are in place and he has registered his project with the Regulator under the Bill. And the registration requirements under the Bill are on a real-time basis, which does not lead to another layer of approvals, as are made out to be.

Limiting the application of the Bill to residential properties would keep the focus of the Regulator, and the need for consumers too is in that part of the sector.

6.        Q:  The projects, which are already built or are in construction  Registration with the regulator won’t be mandatory for projects less than 4000 square meter. So, many small developers will escape from registration and government regulator’s control?


Ans:  The initial draft had provided for 4000 square meters, which has now been reduced to 1000 square meters or 12 apartments, whichever is applicable, after extensive consultations with the States and other stakeholders. Also, the Bill very specifically provides for prospective regulation.

7.      Q: Specifying actual carpet area becomes mandatory Developers are selling flats on the basis of super built area, which includes common passage area, stairs and other areas that is 20-30 percent more than actual flat area?

Ans: What the Bill says is the disclosure by the promoter of the number of apartments for sale has to be based on carpet area, and carpet area has been defined. The buyer should know what he is actually getting and paying for. Concepts such as super-build up etc. are confusing and the Bill intends to standardize the requirements .This will substantially reduce the power asymmetry prevalent in real estate transactions.