Centre repeals state's housing regulatory act

In a major setback to the state’s effort in protecting a legislation it recently enacted to regulate the real estate sector and safeguard the interest of flat buyers, the Centre has decided to repeal Maharashtra’s housing regulatory act.

Despite strong opposition by the Maharashtra government against plans to rescind the state housing legislation, a Parliamentary Select Committee on the Central Bill presented its report last week to the Rajya Sabha, along with the Centre’s amended Real Estate (Regulation and Development) Bill, 2013, retaining a clause that states the Maharashtra Housing (Regulation and Development) Act, 2012 stands repealed upon implementation of the Centre's bill.

Several people associated with the development in New Delhi told mid-day the Select Committee found the Maharashtra act to be ‘weak and diluted’ on many fronts, apprehensions in this regard were also raised by various submissions during the suggestion and objection period. The Mumbai Grahak Panchayat, a consumer rights body, had in its submission on June 16, called the Maharashtra act less ‘consumer friendly and deficient’ in several aspects.

These included: provisions to allow the promoter to accept 20 per cent of the sale price without entering into an agreement for sale, allowing the promoter to seek disconnection of essential services in case a flat purchaser defaults in just three months, provisions excluding rehab component in redevelopment projects from any scrutiny.

The Union Select Committee was appointed in May to review the available alternatives for states with their own housing bill placed concurrently to the Central Bill. Maharashtra had raised strong objections to the decision to introduce a clause in the Central Bill proposing to repeal the state act, calling the move ‘unconstitutional’.

In a meeting with the Select Committee in Mumbai in June, representatives of the Maharashtra government pleaded their act should not be repealed, and both laws should be allowed to function in tandem. Maharashtra raised issues concerning deemed conveyance under clause 15 and removing the exemption limit under clause 3(2) of the Central Bill.

In these, the Central Bill does not make provisions for right to title in deemed conveyance, even as almost half a lakh societies in Mumbai are yet to get a title on their plot, state officials said. “We argued that our act is far reaching and does not go soft on the builders, as is the case with the Central bill,” said a senior state official.

Some weaknesses of Centre's draft bill

>> The bill fails to provide any time limit within which the promoter is required to execute the conveyance.

>> Section 15 is also silent on the utilisation of balance floor space index (FSI) and transfer of development rights (TDR).

>> Section 15 also fails to provide deemed conveyance.

The Maharashtra Act and its weak points

>> Section 9 allows promoters to accept up to 20% of the sale price without entering into an agreement of sale.

>> Allows the promoter to seek disconnection of essential services like water and electricity if flat purchaser defaults in payment for just three months.

>> The proceedings of the tribunal are strictly bound by civil procedure code (CPC), resulting in complicated proceedings.

>> The Act does not cover agents. It does not include persons who purchase flats under MHADA or CIDCO.

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