BENGALURU:The state’s Real Estate Regulatory Authority (RERA) has made it mandatory for all real estate developers to update it on a quarterly basis about the ongoing progress of their projects as well as the expenditure incurred for every specific feature. It has also introduced certificates for approved builders on May 3
What is RERA or Real Estate (Regulation and Development) Act of 2016? How does it affect the Real Estate industry in India?
RERA stands for the which empowers all stakeholders in real estate sector, such as consumers, developers, brokers/intermediaries and more by bringing much-needed transparency and accountability to place greater emphasis on planning and implementing unambiguous deeds of doing business in the sector.
The Central Government implemented RERA on 1st May 2016.
Starting from the launch of a project to post-sales issues of plots, apartments, shops, offices and other such properties, the Act covers a vast range of regularities of the real estate market.
The main features of Real Estate (Regulation and Development) Act, 2016 are as follows:
1. Real Estate Regulatory Authority and Appellate Tribunal
According to the Act appropriate state government shall establish Real Estate Regulatory Authority to regulate and promote the state’s/UTs real estate sector. The Authority shall facilitate efficient, transparent and healthy modes of business deeds in the real estate sector while protecting the interest of allottees, promoters and real estate agents. As per the Act, the authority shall also establish an adjudicating mechanism for speedy dispute redressal of registered real estate projects.
The key errands of the RERA Authority shall be as follows:
- Ensuring disclosures of real estate projects by promoters/developers
- Registration of real estate projects
- Registration of real estate agents
- Complaints redressal
- Advising and recommending the state government in matters related to the development & promotion of real estate sector;
The state/UTs shall also establish Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority. Any person not satisfied with any direction or decision or order made by the Authority or by an adjudicating officer may file an appeal before the Appellate Tribunal and the appeal shall dispose within a period of sixty days.
2. Real Estate Projects Registration
All commercial and residential real estate projects will have to register with RERA having;
- Area of land proposed to be developed is more than five hundred square meters
- More than eight apartments inclusive of all phases
- Thereal estate project/phase of the project prior to initiation of this Act. Failing to do so will attract a penalty which may extend up to ten per cent of the estimated cost of the real estate project and if the promoter violates the rules continuously then he shall be punishable with imprisonment up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project or both has not received completion certificate for a
- Any alternation or deed in the real estate project which involve marketing, advertising, selling or new allotment of any apartment, and plot or building
The RERA rules also prohibits promoters to advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot or apartment or building in any real estate project or part of it, in any planning area within the state, without registering the real estate project with the state’s Real Estate Regulatory Authority(RERA). The Act mandates the promoters to provide quarterly updates on the status of the project to the authority.
3. Real Estate Agents Registration
The RERA Act mandates all real estate agents to register under this Act. It prohibits any real estate agent to facilitate any real estate business such as the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot or apartment or building in a real estate project or part of it, without obtaining registration under this section.
If any real estate agent fails to register with the authority, he shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend up to five per cent of the cost of plot, apartment or buildings of the real estate project, for which the sale or purchase has been facilitated.
4. Filing of complaints
Any aggrieved person either he/she is a buyer, promoter or agent, may file a complaint with state’s RERA or the adjudicating officer with respect to any registered real estate project, for any violation or breaching of the rules and regulations of this Act. Further, any person aggrieved by any direction or decision or order made by RERA or by an adjudicating officer has rights to file an appeal before the Appellate Tribunal
Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court.
5. Financial Discipline
The Act ensures greater financial discipline in the real estate sector with provisions mentioned below:
- A promoter is prohibited from accepting more than ten percent of the cost of the plot, apartment, or building as an advance payment or an application fee, from a buyer that too without making a written agreement for sale with the person and register the said agreement for sale
- A promoter shall deposit seventy per cent of the amounts realized for the real estate project from the allottees/buyers in a separate account (Escrow account) to be maintained in a scheduled bank to cover the cost of construction and the land cost
- The funds withdrawn from escrow accounts shall be in proportion to the percentage of completion of the project and shall be certified by an authorised architect, an engineer or a chartered accountant in practice
- Promoter shall compensate buyer if any false or incorrect statement is given in regards to the real estate project, plot, apartment or building with full refund of property cost with interest
- Project Accounts must be Audited / FY and a copy of the same is to be submitted to the state’s RERA authority.
- The state RERA shall freeze project bank account upon non-compliance
The Act shall promote transparency in the real estate sector by providing;
- Details of all the Registered Projects online for citizens including:Sanctioned plans approved by the competent authorityProposed layout plan of the whole project and floor space indexProposed Number of building(s) or wing(s) or phase(s) to be constructed and approved number of the building(s) or wing(s) or phase(s)Stage wise time schedule of completion of the project, including the provisions for basic civic infrastructure like water, sanitation and electricityQuarterly update of the list of booked apartments or plotsQuarterly update of the list booked covered parking or garagesQuarterly update of the list of approved and pending approval of commencement certificateDisclosure of other information and documents as may be specified by the regulations made by the state’s RERA
7. Citizen-Centric Approach
- Citizens have rights to view theprojects website, all disclosures pertaining to registered
- The promoter is prohibited from making any additions and alterations in the sanctioned plans, layout plans and specifications and the nature of fixtures, fittings and amenities etc. without the previous consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such building
- The promoter shall pay interest or every month of delay if he/she fails to give possession of an apartment, plot or building, in accordance with the terms of the agreement for sale. He shall also return the full amount along with the interest taken from the allottee if in case the allottee wishes to withdraw from the project if the promoter fails to provide any other remedy available
- The promoter shall form legal entity like cooperative society, association, federation etc. within three months from the date on which sixty per cent of the total number of purchasers in such a building or a wing, have booked their apartment
- The promoter shall execute a registered conveyance deed in favour of the allottee within three months from the date of issue of occupancy certificate or sixty per cent of the total numbers of purchasers in such a building or a wing have paid the full consideration to the promoter, whichever is earlier
Real Estate (Regulation and Development) Act 2016 is a step towards developing the real estate sector in India, infusing greater transparency, citizen centricity, accountability and financial discipline.
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