RERA – Beginning of a new ERA
Real Estate (Regulation and Development) Act 2016
India is ushering into a new era from the Real Estate’s Regulations perspective. While Real Estate (Regulation and Development) Act 2016 (“RERA”) was passed in 2016 and partially made effective from 1st May’2016, it has become mandatory from 1st May’2007 across India with all the sections of RERA duly notified by Central Government now.
It is a known fact that in majority of cases, real estate consumers in India have been suffering in in absence of any specific law and regulation. With implementation of RERA, states and UTs are required to appoint Real Estate Regulatory Authority (“Authority”) to supervise Real Estate activities in their respective jurisdictions.
The new act marks a landmark change in Real Estate environment in India. Now all the Builders (referred as “Promoters” in the Act), are mandatorily required to register their projects with authority. Similarly, Real Estate Agents (“Agents”) are required to register themselves with the authority if they wish to deal in real estate market.
Looking at the current situation of consumer suffering across India where projects delivery is significantly delayed due to non-completion of projects in time by Builders, RERA is expected to bring fresh breeze. We feel that implementation of RERA across country is highly pro-consumer and pro-industry initiative and if implemented in letter and spirit, shall bring transparency and positive change in the Real Estate Industry in the country. While a total of 60 sections were notified last year, balance 32 sections have been notified on 20th April’2017 which primarily includes sections relating to registration of ongoing projects that have not received completion certificate and penalties for non-compliances.
Some of the important aspects of RERA are given below:
Builders shall now need to register all the projects where the area of land proposed to be developed is more than 500 Square Meter or number of apartment proposed to be developed is more than 8 (inclusive of all phases)
• Status of Existing projects
While RERA is applicable to all the projects that have started from 1st May’2017 and thereafter, all old projects for which completion certificate has not been obtained by 30th April’2017 are mandatory required to obtain registration with authority with 3 months from the date of commencement of this Act i.e. by 31st July 2017
• No-Diversion of Funds
Promoters/Builders are mandatory required to deposit 70% of money received from home Buyers to a separate project Account. The money can be withdrawn in proportion to the % of completion of the project with certification from an Engineer, an Architect and a Chartered Accountant in practice that withdrawal is in percentage of completion of the project
• No change in project specification without Buyers’ permission
Project promoters cannot make any changes including addition or alternation in the sanctioned plan, specification and nature of fixture, fittings that are agreed with buyers without previous written consent of at least 2/3rd of allottees.
• From Super Area to Carpet Area
Buyers shall be required to pay only for Carpet Area and not the super area as is the current practice. Carpet area has been clearly defined to include only the usable floor area of an apartment excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment
• Approvals before Sale
Project Promoters shall be required to obtain approval and commencement certificate from competent authority and the same shall be required to be submitted for registration of project along-with sanctioned plan, layout plan as sanctioned for registration of project
• Five Year Warranty
In case of any structural defect or quality issues regarding the work or services, buyers can complaint to project promoter within a period of five years from the date of handing over of possession and promoter shall be bound to rectify such defect without any further charges within 30 days.
• Real Estate Agent Registration
Any agent, who wishes to deal in any of the project, shall be required to get registered with authority. Operation by Real Estate Agents without registration with Authority is not permissible and shall be treated as non-compliance to RERA and punishable in line with provisions of the Act.
• Stringent penalties and imprisonment for non-compliance
Stringent penalties have been defined for non-compliance of RERA provisions which may be further extended to imprisonment for promoters.
We feel that with complete implementation of RERA, Real Estate industry is entering a new regime with protection for consumers and tougher laws for non-compliance which is a basic requirement for any industry to grow.
We shall be pleased to revert for any query if have on RERA.
Please contact us at firstname.lastname@example.org