Report on Parliamentary Debate in Lok Sabha
The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it was largely unregulated till the enactment of RERA in 2016. There was, thus, the absence of professionalism, standardization and lack of adequate consumer protection.
Though the Consumer Protection Act, 1986 was available as a forum to the buyers in the real estate market, the recourse was only curative and was inadequate to address all the concerns of buyers and promoters in that sector. The lack of standardization has been a constraint to the healthy and orderly growth of the industry. Therefore, the need for regulating the sector had been emphasized on various forums, which led to the enactment of Real Estate (Regulation and Development) Act, 2016 (RERA).
RERA: An Introduction
The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The Act establishes a Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute resolution. The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016.
The Act came into force on 1 May 2016 with 59 of 92 sections notified. Remaining provisions came into force on 1 May 2017. The Central and State governments are liable to notify the Rules under the Act within a statutory period of six months. The passing of the Real Estate (Regulation and Development) Bill, 2016 was not one time process. It took several years of analysis, amendments, and repudiation of prospective provisions of RERB before it could be passed by the Parliament of India to become an independent Act.
In this article the emphasis would be put at the debates held in the Parliament between the MPs upon the various provisions of RERB, to understand the legislative intent behind the passing of the RERA.
Stages in passing of Real Estate (Regulation and Development) Act, 2016 (RERA)
- January 2009: The National Conference of Ministers of Housing, Urban Development and Municipal Affairs of States and UTs proposed a law for real estate sector.
- July 2011: During subsequent consultations by the Central Government, it was decided to enact a central law for real estate sector. This was endorsed by Competition Commission of India, Tariff Commission and Ministry of Consumer Affairs. Ministry of Law & Justice suggested a central legislation for real estate under specified entries of Concurrent List of the Constitution for regulation of contracts and transfer of property.
- June 2013: Union Cabinet approved The Real Estate Bill, 2013.
- August 2013: The Real Estate Bill, 2013 was introduced in the Rajya Sabha.
- September 2013: Bill was referred to the Department Related Standing Committee.
- February 2014: Report of the Standing Committee tabled in the Rajya Sabha and the Lok Sabha.
- February 2015: Attorney General upheld the validity of central legislation for Real Estate Sector and the competence of Parliament.
- April 2015: Union Cabinet approved Official Amendments based on Standing Committee Report.
- May 2015: Real Estate Bill, 2013 and Official Amendments referred to the Select Committee of the Rajya Sabha.
- July 2015: Select Committee of the Rajya Sabha tabled its report along with the Real Estate Bill, 2015.
- December 2015: Union Cabinet approved the Real Estate Bill, 2015 as reported by the Select Committee of the Rajya Sabha for further consideration of Parliament.
- December 2015: Bill listed in the Rajya Sabha for consideration but could not be taken up.
- March 2016: The Rajya Sabha passed the bill.
- March 2016: The Lok Sabha passed the Bill.
- March 2016: President of India accorded his assent to the Bill.
- March 2016: The Real Estate (Regulation and Development) Act, 2016 was published in the Gazette for public information.
- April 2016: 69 Sections of the Real Estate (Regulation and Development) Act, 2016 notified by the Ministry of Housing & Urban Poverty Alleviation on 27 April 2016 bringing the Act into force with effect from 1 May 2016.
Parliamentary Debate over enactment of RERA
Sri M. Venkaiah Naidu moved the motion for the consideration for the Real Estate (Regulation and Development) Bill, he said “I would like to request the hon. Members to pay a special attention to this Bill because this Bill is the need of the hour. We have been discussing about some regulation in the Real Estate for the last 11 years because all the buyers/consumers across the country are agitated rightly and they are not getting adequate redressal system as per the previous arrangement.
So, keeping that in mind, during the UPA regime, a Bill was brought and the Bill was referred to the Standing Committee. The Standing Committee has made certain recommendations. Out of 30 and odd recommendations, 22-23 recommendations were accepted. In between, there was a change of Government and the Government that came has brought it in the form of a new Bill. The Bill, which was approved by the Standing Committee consisting of Lok Sabha and Rajya Sabha members were again referred to the Select Committee of Rajya Sabha and the Select Committee of the other House has done an excellent job. The Bill was debated and decided in the Rajya Sabha almost unanimously.”
Shri. Venkaiah Naidu explained the objective of the bill as follows:
- The purpose of the Bill is to make consumer, i.e. homebuyers and investors the king, and to bring transparency and regulation to the people who are involved in this sector.
- This Bill seeks to create a set of rights and obligations for both the consumers as well as developers.
- The Bill also seeks to encourage both of them to live up to the expectations of each other as per the agreement entered into by both of them.
- This Bill seeks to establish a regulatory authority with which the developer will register the project to be launched.
- The Bill seeks to provide uniform regulatory environment and orderly growth of the real estate sector.
Sri Venkaiah Naidu emphasized upon the need for Government of India, State Governments and private sector to join together to achieve the objective of housing for all by 2022 . We have so many prestigious projects in the country.
Sri K.C. Venugopal observed “This historic Bill, like many other important Bills was originally brought by the UPA Government. At that time, like those Bills and AADHAR, this Bill was also opposed by the Members now in Treasury Benches. Some crucial provisions of the original Bill have been omitted by the NDA Government. That is why there is a demand from the Rajya Sabha for referring it to the Select Committee. To build a home is the dream of the people especially the poor people. We know that there are a lot of faulty practices and cheating in real estate sector so I welcome this Bill…..”
Sri Prahlad Singh Patel welcomed the bill, by explaining that the real estate sector provides second largest number of employment opportunities after agriculture. Approximately 76000 domestic and foreign companies are engaged in this sector. Rural areas and small towns are short of 70 per cent housing facilities whereas big cities have 30 per cent shortfall. The Government has a dream of providing house to all by the year 2022. We need 5-6 crore houses. How will we fund it? The investors have got confidence after this Bill. If FDI comes in, certainly, the employment opportunities will also grow. Now the procedure will be simplified. There are lakhs of houses lying vacant in several cities. Habitations often spread around the cities on cultivable land. Some provision for saving the agricultural land should also be made in this Bill.
Sri R.P Murtaza criticized the bill, according to him,
- Land is a State subject. It would have been a better idea, had this been sent as a model Bill to the States, with States enacting their own Bill to regulate the real estate sector.
- This Bill would bring several state Government agencies under the purview of the Act.
- The Bill provides for prior registration of real estate projects with a Real Estate Regulatory Authority and talks about the area and number of apartments.
- The power to modify the threshold limit should vest with the State government and should not be appropriated by the Central Government.
- This Bill will result in making homes and flats more expensive in India. This would drive genuine, small time marginal developers out of the realty business and MNCs would only thrive.
Prof. Saugata Roy, welcomed this Bill with open arms, reasons given by him for the same; the realty sector in the country is faced with two types of problems. On the one hand there is a total glut in the real estate sector. FDI in real estate has trickled down to about six per cent. The Government must do something to push the real estate sector. The transparency brought in by this Bill, the real estate sector will give a spurt in the housing activities. The Bill has been well-thought out and it has several parts.
Sri. Kalikesh N. Singh Deo accepted the bill with some suggestions, which were:
- The need to bring in regulatory authority, i.e. individual authority with an appellate tribunal to address the concerns of the buyers and the promoters.
- The minimum size of plot required for registration is 500 square metres. This ceiling should be done away with.
Dr. Shrikanth Eknath Shinde, also accepted the Bill, praising the provision by way of which, developer will have to put 70 per cent of the money received from the customers for a new project in a separate ‘escrow’ account so that the funds are not directed to start a new project. This is a huge step to ensure that the construction is completed within the stipulated time. There are many provisions in the Bill which give comfort to the buyers against delay and fraud.
Dr. Boora Narsaiah Goud, questioned the bill, he specifically said “This Bill effectively addresses most of the issues pertaining to the customer, addresses some of the issues pertaining to the developer, but does not address the issues pertaining to the competent authority which most of the times is the reason for delay and escalation in the cost.”
Dr. A. Sampath, specifically highlighted the fact that the definition of “allottee” in Clause 2(c) of the Bill may be improved. He specifically announced that he supports the Bill.
Sri Rajesh Rajan, Adv. Joice George, Sri. M.K. Raghavan, Sri N.K. Premchandran and Srimati Poonamben Maadam all supported the Real Estate (Regulation and Development) Act, 2016.
Sri M. Venkaiah Naidu replying said: I am thankful to all Members who have spoken on this important Bill. One hon. Member made out a point that Parliament has no jurisdiction to pass this Bill. The Bill is meant only for contract and transfer of title. The land and other related issues are left to the local bodies. The Law Department as well as the Attorney General has opined that the Parliament has jurisdiction because it is a concurrent subject. So, keeping that in mind only we brought this Bill………………… I am sure that this Bill will live up to the expectations and aspirations of the people.
The Bill was passed.