The Real Estate (Regulation and Development) Act is a government initiative to bring about the much needed transparency in Real Estate. For creating a systematic and a uniform regulatory environment, above all protecting the consumer interest by timely completion of projects, RERA is synonym to the regulation and promotion of real estate sector. With the growth of Indian economy, migration of people to urban centers, increase in disposable incomes, foreign investments, etc. the demand of Real Estate has increased in every form. While the young buyer is purchasing his/her own residential property, commercial spaces are in demand by foreign investors. Looking at all this, it seems that there was no better time to introduce Real Estate (Regulations and Development) Act as the Indian Government is focusing on - housing for all, smart cities and infrastructure development, fulfillment of these goals will require enablers such as the Act. Going by its dictionary definition, the act paves way for empowering all stakeholders engaged in the business as well as consumption of real estate. It covers consumers, real estate developers, brokers and all the other intermediaries. So lets have a quick look at some highlights of the Act:
Ongoing projects: The biggest pain point for a home buyer is that the on-going projects never get completed. Under RERA, the developers of the on-going projects without the Completion Certificate (CC) will have to deposit 70% of the amount collected from home buyers in a separate escrow account within 3 months of registering a project with RERA. This is to ensure that the money that the buyer has given for the project completion is used only for this purpose.
Penalty: In case of any delay, the developer will have a pay compensation with an interest rate. Moreover, the rule book also has clauses of imprisonment in case of violation of the orders of the Real Estate Appellate Tribunal. The Real Estate authorities and appellate tribunals shall dispose of complaints within 60 days.
Transparency: For all the ongoing projects (that have not received a Completion Certificate) the developers will have to make public the sanctioned plans. All the specifications and changes made later (if any) have to be declared. In addition to it the original timeline for completion and the time period within which the developer undertakes to complete the project has to be shared.
Sale in Carpet area: The promoter shall also be required to declare the size of the apartment based on carpet area even if it was sold earlier on any other basis.
Financial Capacity: For registration of projects with the authorities, the developers have to share their PAN Card number, audited profit and loss reports, balance sheet, cash flow statement and auditor's report of the promoter for the immediate three preceding years, authenticated copy of legal title deed, copy of the collaboration agreement if the promoter is not the owner of the plot. All the information about the promoter has to be declared.
Construction Status: The promoter will also have to upload details regarding number and type of apartments or plots, status of the project with photographs, floor-wise, the status of construction of internal infrastructure and common areas with photos, status of approvals received and expected date of receipt, within 15 days of the expiry of each quarter on the project website.
No Income Tax returns required: In a departure from the draft rules, the requirement of disclosing Income Tax returns has been withdrawn in the final rules keeping in view the confidentiality attached to them and as pointed out by legal experts and promoters.
Detailed Description on RERA website: In addition to this, the Real Estate Regulatory authorities will also publish information relating to profile and track record of the promoters, details of litigations, 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., on the RERA website.
When the Bill was initially introduced it was supposed to cover only residential projects. Later, it was amended to include commercial projects as well, including shops, offices and buildings. The Real estate sector is supposedly one of the largest contributors to Indian economy and among the largest employers too. However, real estate transactions in the country have largely been a tiresome and ambiguous affair for consumers. There is a need for clean-up of this system was being felt for long. We need regulatory oversight on real estate developers and brokers defining the duties of real estate developers and default scenarios. We will have to set up timelines for registration of projects and dispute resolution. Overall the (Real Estate Regulations and Development) Act, 2016 is a much needed framework that will not only empower the consumer but also make the industry more competitive and organised.