New real estate laws to boost residential segment: Crisil
Mumbai: The real estate regulatory bill, when enacted, is expected to boost demand for residential property, rating agency Crisil said on Friday.
The Real Estate (Regulation and Development) Bill, approved by the Union Cabinet on Tuesday, provides for setting up a regulator for the sector and has provisions like jail term of up to three years for developers for offences like releasing misleading advertisements.
"The Bill will incorporate mandatory disclosure clauses, which would provide greater clarity on the project standards and timelines for completion. For developers, while this bill implies stricter regulatory control, it will also translate into better demand, as buyer confidence improves," Crisil said in a statement.
Delays in hand-over of projects are likely to decline as clauses mentioned in the Bill mandate strong commitment from developers to complete projects as per schedule, it said.
The Bill mandates that 70 percent or such lesser percentage, as notified by the appropriate state government of the money raised for a project should be deposited in a separate account.
Crisil said: "By ensuring that developers do not divert funds meant for a particular project to other projects, the Bill seeks to curb delays in project completion due to shortage of funds.
"The Bill also protects buyers against project delays by requiring that developers refund the amount paid along with interest in the event of a delay. Both these factors are expected to ensure timely completion and hand-over of projects to the buyers."