Draft Central Realty Bill Says Builders Have To Give Break-Up of Built-Up And Carpet Area In
Builders may soon find it impossible to hide behind terms like "super area''-built-up area in Mumbai builders' lingo-to conceal the real floor area of apartments they are selling. A new law to regulate real estate developers will require builders to exclude common spaces and balconies while spelling out the floor space of a residential unit.
The proposed bill, a draft of which the Centre is currently working on, will make it mandatory for the builder to specify the area of an apartment in the sale agreement. Besides, a break-up will have to be provided of what the builder is charging for the apartment and a separate calculation for charges levied for common spaces like corridors, parking and lifts.
The Real Estate (Regulation and Control) Bill would allow the buyer to know clearly which common facilities and areas can be used freely and where residents would have limited access.
Builders often juggle between carpet area and super area to confuse buyers, who end up not knowing the floor area of their houses. There have been instances of apartments in the same block having different floor areas and builders even adding parts of common spaces into the floor area of a flat.
The proposed bill notes that often developers promise the moon, claiming that an apartment complex will have its own clubhouse, gym and swimming pool. It is only after buyers have moved in that they realise that many facilities are charged extra. The payment is not merely service charge but also the construction cost.
The bill hopes to provide stringent safeguards against claims that are not honoured.
The urban development ministry intends to put the onus of registration on the property developer and has provided that the sale agreement be registered within three months of the signing of the deal. Failure to comply with the provision will result in a fine of up to 5% of the cost of the house or Rs 50,000, whichever is higher. Builders will also have to shell out Rs 1,000 for each day of default.
This again is the result of developers promising to get the property registered and often sitting on the registration and processing fee collected from buyers. Some of the builders have in the past just kept the money in their bank accounts and earned interest on it for as many as three-four years.
The bill also seeks to bind developers to the date when possession will be given to the buyers. The clause is proposed to be included in the sale agreement itself and any delay will attract a penalty in the form of interest on the advance, to be decided by a regulator, which the Bill also envisages.
The bill is likely to be tabled in the winter session of parliament.
BRICKS IN THE WALL
- The draft bill asks real estate developers to exclude common space and balconies while spelling out floor space of a residential unit
- Builders have to give break-up of charges for flat and a separate calculation for costs levied for common spaces
- The bill seeks to ensure promises like clubhouse, gym and swimming pool are honoured and not charged separately later
- The onus of registration will be on the property developer within 3 months of the signing of a deal on the pain of penalty
- The bill also seeks to bind developers on possession date. Any deviation from date on deed will attract penalty