Understanding Salient Features of The Real Estate (Regulation And Development) Act, 2016, (RERA)
To regulate the real estate sector, the Government has come up with the idea of Real Estate Regulatory Authority (RERA) Bill which is expected to help buyers. It extends to the whole of India except the State of Jammu and Kashmir. RERA intends to protect the interest of the home buyer, ensure timely delivery of projects and enhance transparency in the real estate sector. Real Estate Regulatory Authority (RERA) Bill was introduced in 2013 and finally the bill got approved in March last year. The Act came into force on 1st May 2016 with 59 of 92 sections notified.
How Buyers Get Benefitted by the RERA Act :
- Under RERA, each state will have to set up regulatory bodies as appellate tribunals to solve the disputes between buyer and builder within 120 days.
- Developer will have to put 70% of the money collected from a buyer in a separate account which is required to be maintained in a scheduled bank to meet the construction cost of the project. The developers may also face a jail term of 3 years in case they fail to deliver.
- No registrationof the real estate project shall be required where the area of land proposed to be developed does not exceed five hundred square metersor the number of apartments proposed to be developed does not exceed eight inclusive of all phases. Provided that, if the appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under RERA Act.
- For registration of projects with the authorities, developers will be required to submit authenticated copy of PAN card, annual report comprising audited profit and loss account, 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 collaboration agreement if the promoter is not the owner of the plot.
- Once the registration is granted by RERA, the builder or developer has to publish entire details of their projects on the website of the Regulatory Authority. The registration is valid for the period indicated in theproject application as the time required for completion of the project. Once this period is over, RERA has a right to revoke the registration granted for this project.
- Projects which were ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to RERA for registration of the said project within a period ofthree months from the date of commencement of this Act.
- RERA also seeks to impose strict regulations on the promoterand ensure that construction is completed on time.
- Carpet area has been clearly defined in the bill to include usable spaces like kitchen and toilets imparting clarity which was not the case earlier.
- A developer’s liability to repair structural defects has been increased to 5 years from the earlier 2 years.
- The buyer will pay only for the carpet area(area within walls). The builder can’t charge for the super built-up area, as is the practice at present.
- Developers will be able to sell projects only after the necessary clearances. Under RERA, builders and agents will have to register themselves with the regulator and get all projects with more than eight apartments registered before launch.
- To enable informed decisions by buyers, RERA will ensure publication on their websites information relating to profile and track record of 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.
- Gautam Chatterjee, RERA chairman, had recently sent a letter to Slum Rehabilitation Authority (SRA) has directed them to registerall upcoming slum projects on the website. Land of slum dwellers, that are eligible under the criteria of (SRA), is given to a developer who builds a permanent structure for slum residents. The developer in return gets additional Floor Space Index who can then build a sale component and make profit.
How Builders Get Benefitted by RERA :
The builders will get benefitted , as it proposes to impose penalty on allottee for not paying dues on time. Also, the builder will have the opportunity to approach the regulator in case there is any issue with the buyer.
But, builders believe that the bill was heavily stacked against them. The bill provides for penalty up to 10 per cent of the total project cost or even imprisonment, if builders do not honor their commitment or fail to register themselves with the regulator.
As on July 31, 2017, 23 states and union territories (UTs) have either established their permanent or interim regulatory authorities.
Under the RERA, every state and UT must have its own regulator. Developers will not be able to market their ongoing or upcoming projects, till they register either with the permanent or interim regulator in states.
Only four states – Gujarat, Maharashtra, Madhya Pradesh and Punjab – have established their permanent Real Estate Regulatory Authority, while 19 states/UTs have established interim authorities.