House panel on real estate bill seeks jail term for errant builders
House panel on real estate bill seeks jail term for errant builders (TOI)
A parliamentary panel looking into the Rea Estate Bill has recommended penalty for defaulting real ors and even jail term of up o three years for repeat of enders. The committee has also recommended severa amendments to protect con sumers including the provi sion of interest payable by both allottees and the devel opers to be the same in case of any default by either party something that will make the ransaction more equitable.
Reinforcing the existing penal provision of the NDA's bill, the select committee has also recommended that the violation of orders of the ap pellate tribunal by develop ers should be treated as a “se rious offence“ and the pena provisions are inadequate The present bill provides for mprisonment up to three years and or with fine up to 10% of the project cost. Simi arly , if a real estate agen ails to comply with the tribu nal's order, he can face im prisonment up to one year or with fine up to 10% of the cos of plot or apartment.
The panel in its report has mentioned that there was difference of opinion among the members regarding imprisonment and a few had sought deletion of the jail provision and reducing penalty up to only 2%. But these were rejected by the committee. Committee chairman Anil Mad hav Dave said the recommendations aimed at making a law that will “promote good builders, punish errant ones“.
The bill envisages setting up of a regulator for the realty sector.
In order to bring parity be tween developers and home buyers, the committee said, “The interest rate payable by the promoters as well as by allottees shall be same in eventuality of any default by either of them.“
At present, while developers pay only 2%-4% interest in case of their default, the consumers are made to pay as high as 16%-18% interest for their default. This has been the main reason behind huge number of home buyers dragging the developers to courts.
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The real estate sector certainly needs much more stringent regulation than we have had so far. Stories of buyers putting all their savings into a dream home project only to be taken for a ride by unscrupulous builders are all too common. Effective regulation should not be seen by the industry as being against its interests. In fact, honest developers, who are willing to play fair should welcome it, because it will protect them too against unfair competition from fly-by-night operators.