A provision to this effect has already been incorporated in a bill, which was registered for endorsement in the parliament last week. [break]
The government is also forcing companies undertaking housing projects to allocate 10 percent of their project’s space for people from low-income groups. “If someone who is not properly registered or who has flouted other provisions is found brokering transactions, he will be fined Rs 500,000 as punishment,” reads the bill.
The bill says that dealers—individuals or groups—must be registered with the government for brokering realty transactions. “This provision has been incorporated with a view to protecting the interests of both buyers and sellers,” said Bijay Kumar Gachchhadhar, Minister for Physical Planning and Works.
“Its aim is to make dealers accountable and to prevent buyers from being deceived into making bad deals,” he elaborated, adding that it was also aimed at bringing real-estate brokerage jobs under the tax net.
Currently, a large number of brokers operate in an unorganized way and the sales that they make are not taxed. This has caused substantial leakage of revenue, according to the Inland Revenue Department (IRD), which has tagged the real-estate sector as one of the revenue sensitive sectors.
Moreover, the bill makes it mandatory for housing companies to strictly adhere to the contracts they sign with buyers and to hand over on time the houses and apartments that are being sold. According to the bill, brokers will henceforth have to comply with building codes and other construction-related norms.
The bill entrusts to the housing companies the task of securing enough land for projects, building access roads and infrastructure and managing the logistics. And the housing companies will be responsible for managing the services that they will provide, and for repairing and maintaining the structures that will be built.
All these strictures may make it seem as if the bill is stacked against the builders, but it does actually try to balance out responsibilities. “For example, in case a company fails to secure land necessary for connecting its building site with the main road, the government will conduct the acquisition on behalf of the company,” says the bill. The responsibility for compensating the land owner on whose land the road will get built, however, will rest on the company itself.
Gachchhadhar said that the provision was incorporated to protect the interests of investors and to facilitate the growth of housing projects. The bill is, however, silent on the issue of land pooling for project development, an issue that the land and housing developers had strongly demanded be addressed.
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