Real Estate: The New Maharashtra Housing Act - A step forward
- Status of the Bill: In a step which could bring in a fair amount of transparency into the Real estate sector, the Maharashtra Housing (Regulation and Development) Bill, 2012, has been cleared by both the houses of the Maharashtra State Legislative Council and awaits Presidential assent. The Act shall repeal the Maharashtra Ownership Flats Act, 1963, which has been the primary Act till recently to provide relief to the flat purchasers against sundry abuses, malpractices and difficulties related to the construction, sale, management and transfer of flats. This Act was also adopted by majority of the other states with certain modifications. However, with the passage of time, the Act has been rendered ineffective in protecting the interest of flat purchasers and hence, the need for a new Act.
- Removal of information asymmetry: The Act is attempted to ensure full disclosure of information by the promoters/developers regarding the project and compliance of agreed terms & conditions.
- Establishing a Regulatory Authority and an appeal mechanism: The Act calls for establishing the Housing Regulatory Authority to undertake advisory, judicial and administrative functions in order to ensure effective implementation of the Act. Further, the appeal mechanism involves setting up of a Housing Appellate Tribunal for appeals against the direction of the HRA, post which, an appeal can be filed to the High Court followed by the Supreme Court.
- View: The act addresses the key issue of lack of information plaguing the sector. However, the non-inclusion of the escrow account mechanism in the final act, gives certain leeway to the developers. The initial leg of implementation of the act could lead to severe delays in launching projects which could lead to supply constraints. However, this would stabilize over a period of time and lead to an increase in credibility assigned to the sector.
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