One of the most common statement by a home buyer is, ‘The people do deserve to be able to buy a home without being cheated by unscrupulous builders and fleeced by civic agencies for approvals and registrations.’ The Union government has finally notified Real Estate Regulation and Development (General) Rules, 2016. In the beginning of the year 2016, when there were discussions on what all should be a part of RERA, the top agenda was about having an escrow account which will be exclusively used for a particular project. We have been seeing so many projects that always remained in the ‘construction phase’ and a lot had also shut down due to insufficient funds. These are some of the top reasons why though people always want to invest in Real Estate, but are always fearful. Lets have a look at the first face of RERA for the states like:
Union Territories (Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh): The rules of the Union government clearly stipulate that the real estate developers will furnish additional information regarding the ongoing projects besides depositing 70 per cent of unused funds in a separate bank account to ensure their completion. Under the new rules, the developers will also be required to refund or pay compensation to the allottees’ with an interest rate of the State Bank of India's highest marginal cost of lending rate plus two per cent within 45 days of the payments becoming due.
The rules are notified by the Ministry of Housing and Urban Poverty Alleviation and are applicable to the five Union Territories of Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh. in addition to it, it’s mandatory to upload various information about the project including number and type of apartments or plots, garages booked, status of the project with photographs floor-wise, status of construction of internal infrastructure and common areas with photos, the information relating to profile and track record of promoters, details of litigation, advertisement and prospectus issued about the project, details of apartments, plots and garages, registered agents and consultants, development plan, financial details of the promoters, status of approvals and projects etc. To safeguard the buyer, the Rules also provide for compounding of punishment with imprisonment for violation of the orders of Real Estate Appellate Tribunal against payment of 10 per cent of project cost in case of developers and 10 per cent of the cost of property purchased in case of allottees' and agents. Compliance with reasons for punishment shall be complied within 30 days of compounding. The adjudicating officers, Real Estate Authorities and Appellate Tribunals shall dispose of complaints within 60 days.
Delhi NCR: The general rules and regulations for agreement of sale for the National Capital Territory of Delhi provide clarity on some aspects like litigation details that have to be published on website, provision for quality audit of projects and flexibility in agreement for sale. The promoter or developer has to publish details of litigation on the regulator’s website, with other information related to the project while registering the projects. Other clauses include, third-party quality audits, rules for agreement for sale between the buyer and the promoter, flexibility so as to include other elements or features besides the apartment, plot, garage, parking—if require. The Vice-Chairman of Delhi Development Authority (DDA) has been designated as the regulatory authority for National Capital Territory of Delhi under the Act. The full Act is to come into force from 1 May 2017.
Uttar Pradesh: Under the UP RERA rules, ‘ongoing project’refers to projects where development is ongoing, but where completion certificate has not been obtained. But in a major departure from the Centre's RERA, the state's rules also exclude projects where, services have been handed over to the local authority for maintenance or common facilities have been handed over the Resident Welfare Associations or where all the development works have been completed and sale/lease deeds of sixty percent of the apartments/houses/plots have been executed or where application has been filed with the authority for issue of completion certificates. It adds that all real estate agents are required to register with the authority. Upon registration, the authority will issue a certificate with a registration number which will be valid for 10 years. Any refund of money along with the applicable interest and compensation, payable by the promoter in terms of the act or rules to the allottee should be done within 45 days from the date such refund becomes due. As per the Centre’s RERA rules, developers will have to pay allottees' an interest equivalent to the SBI’s highest Marginal Cost of Lending Rate plus 2% in case of delays. However, the UP government is still in the process of defining the rate of interest payable.
Maharashtra: The draft for Real Estate rules for Maharashtra have some controversial clauses like a builder can terminate a flat purchase agreement by giving just a week's notice on email to the buyer who defaults on an installment, but the developer can refund the money without interest to the purchaser at leisure, within six months. The state draft has also proposed to increase the burden on flat purchasers; it says a buyer must pay 30% of the total cost while signing the agreement and 45% when the plinth of the building is constructed. It adds, that builders can pay for the registration fee at Re 1 per square metre, which means for a 1,00,000 square feet project, he has to pay approximately Rs 10,000. A lot of loopholes have been pointed out by housing experts in the draft rules make it evident that the state is more concerned about safeguarding the interests of the building industry rather than flat purchasers.
This is just a glimpse of some steps being taken in the right direction to protect the interest of the buyer. We are hopeful that the face of Real Estate will change and the year 2017 will have some positive news for the investors and buyers.