New Delhi: The Union Cabinet will consider on Tuesday a bill to set up a regulator for the real estate sector with provisions for jail term for the developer for putting out misleading advertisements about projects.
The Real Estate (Regulation and Development) Bill, which seeks to provide a uniform regulatory environment to the sector, was earlier taken up by the Cabinet on April two but was put off due to differences.
The bill seeks to make it mandatory for developers to launch projects only after acquiring all the statutory clearances from relevant authorities.
It also has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction, sources said.
The proposed legislation has certain tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of actual site.
Failure to do so for the first time would attract a penalty which may be up to 10 percent of the project cost and a repeat offence could land the developer in jail.
The bill also seeks to make it mandatory for a developer to maintain a separate bank account for every project to ensure that the money raised for a particular task is not diverted elsewhere.
The proposed legislation provides for clear definition of the 'carpet area' and would prohibit private developers from selling houses or flats on the basis of ambiguous 'super area'.
Under the proposed new law, builders will be able to sell property only after getting all necessary clearances.
Developers will also be barred from collecting any money from buyers before completing all necessary permits to start construction on the project.
Under the proposed law, a developer will also have to specify an outer time limit for completion of the project to the real estate regulator.
The agreements that the developer sign with buyers will also be required to be vetted by the regulator as the buyer may not have the capacity to interpret the fine print of such documents.
The developers, property dealers and agents will have to register themselves with the regulator.
For the developers, Ministry plans to formulate a single window system for clearance of Real Estate Projects throughout the country, which was expected to bring down average approval time from 196 days to 45-60 days.
Apart from other things, the process involved developing of Single Composite Application Form (CAF) which entailed seeking and getting permissions from the Municipal, State and Central Government agencies simultaneously.