Govt. Caps the Penalty for Home Buyers

June 28, 2007	(Be the first to rate this story!)  Loading ...
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The government has recently introduced a clause in the Real Estate Management & Regulation Bill under which penalties have been capped at 1% of the value of a house.

The move has been decided to rescue house owners from stringent penalties by real estate companies for failing to pay on time during development stage of building.

Real estate developers charge penalties as high as at a rate of 8-12% in the absence of any regulation. Almost 30-35% property transactions are associated with development and construction while the remaining is done on the basis of down payments.

In construction linked projects, customers are required to pay to the developer directly as the building is constructed.

As far as second scheme is concerned, the customer deals with the bank which makes one time payment to the developer on behalf of the customer.

The Bill would be taken up by the Cabinet, after which it would be tabled in Parliament. Strict action will be taken against the property developer who will charge the penalty more than the prescribed limit.

The real estate regulator will be first set up in Delhi. Other states may or may not opt for the model as it would be optional for them, since property is a state subject.

However, The Capital will not be given any such option, and other states would next be asked to regulate the law in their respective cities. The law will prevent the developers to ask for any amount in wake of penalty.

News Published Under:   Real Estate India |

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