Impact of Real Estate Bill 2016

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Akhil Verma, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur


The Indian real estate sector has witnessed high growth in recent times due to rapid urbanization and rising income levels. However, it was felt that the sector was largely unregulated and thereby needed a measure of standardization to promote orderly progress. Putting a regulatory mechanism in place, Real Estate Bill was passed by Rajya Sabha on March 11, 2016, and an Act will come into effect soon.

The Real Estate Bill is comprehensive and prescribes regulations spanning over the entire life cycle of a project including booking, development, final handover and responsibility in respect of any defects arising post such handover. It mandates that builders deposit 70% of money in a separate account to prevent widespread diversion of funds to other projects. The focus areas of the RE Bill include industry regulator, greater accountability towards consumers, reduction of frauds and delays, reducing transaction costs and bringing about professionalism and transparency in the real estate sector. Earlier, the real estate sector did not have a defined regulator and any grievance regarding any real estate project were to be taken up either by the consumer courts (under the consumer protection laws) or by the competition commission. With a regulator in place, sector will now be efficient & malpractices will be eliminated. The Bill will give competitive advantage to builders who are efficient in planning and execution as small and inefficient builders will now find difficult to operate.

Real estate bill is vital in making a strong foundation for this sector helping it to develop as a mature market based on trust, accountability and customer service. In concise, the bill of 2016 is a big leap ahead which keeps the buyer’s point in view and keeps a healthy check on the seller.


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