Real Estate Act comes into force today after 8-year-long efforts
The new Act will to promote the growth of the real estate sector in an environment of trust, confidence, credible transactions, and efficient and time bound execution of projects.
The much-awaited and widely-acclaimed Real Estate (Regulation and Development) Act, 2016 comes into force today, May 1, 2016. This will set the process of making the necessary operational rules into motion, along with the creation of institutional infrastructure to protect the interests of consumers. The new Act will to promote the growth of the real estate sector in an environment of trust, confidence, credible transactions, and efficient and time bound execution of projects.
The Ministry of Housing & Urban Poverty Alleviation (HUPA) has notified 69 of the total 92 sections of the Act earlier this week, that the Act will come into force from May 1, 2016, culminating the eight-year-long efforts made in this regard.
A proposal for a law for the real estate sector was first mooted at the National Conference of Housing Ministers of States and Union Territories in January, 2009.
As per the notification, announcing the commencement of the Act on this date, under Section 84 of the new Act, rules should be formulated by the central and state governments within a maximum period of six months i.e by October 31,2016.
The Ministry of HUPA would make Rules for Union Territories without legislatures, while the Ministry of Urban Development will do the same for New Delhi.
The Section 84 of the Act stipulates that “The appropriate Government shall, within a period of six months of the commencement of this Act, by notification, make rules for carrying out the provisions of this Act.”
The states should set up the Real Estate Regulatory Authorities quickly – all real estate projects have to be registered with the authority – and Appellate Tribunals for the adjudication of disputes, which will be the key to provide early relief and protection to a large number of real estate buyers.
The Section 20 of the Act says “The appropriate Government shall, within a period of one year from the date of coming into force of this Act, by notification establish an authority to be known as the Real Estate Regulatory Authority to exercise the powers conferred on it and to perform the functions assigned to it under this Act”. These Authorities will have to decide on the complaints of buyers and developers within 60 days.
The Section 20 of this Act also empowers appropriate governments to designate an officer, preferably the secretary of the department dealing with housing, as the interim regulatory authority until the establishment of regulatory authority under the provisions of the Act.
Regulatory Authorities, upon their constitution, will get three months' time to formulate the regulations concerning their day-to-day functioning under Section 85 of the Act.
Likewise, under Section 43 of the Act, Real Estate Appellate Tribunals should be formed within a maximum period of one year i.e by April 30, 2017. These fast-track tribunals shall decide on the disputes over the orders of Regulatory Authorities in 60 days.
Under the directions of the Minister of Housing & Urban Poverty Alleviation Shri MVenkaiah Naidu, a Committee chaired by the Secretary (HUPA) has already commenced work on the formulation of Model Rules under the Act for the benefit of the states and UTs so that regulations can be formed early on while ensuring uniformity across the country. The Ministry will also will come out with Model Regulations for Regulatory Authorities to save time.
The six-month deadline for the formulation of the rules and one year to set up the Regulatory Authorities and Appellate Tribunals are the outer limit. However, states willing to act faster to implement the requirements, can do so. The Ministry of HUPA will then notify the remaining sections of the Act to enable relief to the buyers under the Act as quickly as possible, as desired by Shri M.Venkaiah Naidu.
The remaining 22 Sections to be notified relate to functions and duties of promoters, rights and duties of allottees, prior registration of real estate projects with the Real Estate Regulatory Authorities, the recovery of interest on penalties, the enforcement of orders, offences, penalties and adjudication, taking cognizance of offences, and so on.
Chronology of events leading to the Real Estate (Regulation and Development) Act, 2016 coming into force:
- The National Conference of Ministers of Housing, Urban Development and Municipal Affairs of States and UTs held on January 20, 2009, proposed a law for real estate sector;
- During subsequent consultations by the central government, it was decided to enact a central law for the real estate sector. This was endorsed by the Competition Commission of India (CCI), Tariff Commission, Ministry of Consumer Affairs;
- Ministry of Law & Justice suggested central legislation for the real estate sector in July,2011 under specified entries of Concurrent List of the Constitution for regulation of contracts and transfer of property;
- The Union Cabinet approved the Real Estate Bill, 2013 on June 4,2013;
- The Real Estate Bill, 2013 introduced in Rajya Sabha on August 14,2013;
- The Bill was referred to the Department Related Standing Committee on September 23,2013;
- The Report of the Standing Committee tabled in Rajya Sabha on February 13,2014 and in Lok Sabha on February 17,2014.