For the past many years, the real estate sector has been witnessing numerous challenges in terms of delay in delivery of projects, uncompleted projects, rising cost of construction, regulatory issues, demonetisation, etc.
For the past many years, the real estate sector has been witnessing numerous challenges in terms of delay in delivery of projects, uncompleted projects, rising cost of construction, regulatory issues, demonetisation, etc. However, with the Real Estate (Regulation and Development) Act, 2016 (RERA) becoming effective today, the face of real estate is all set to change drastically.
“RERA is a win-win situation for both developers and buyers as the former will enjoy the benefits of consumer confidence coming back to the market while the latter will benefit from the much-needed transparency and on-time delivery of projects,” says Amit Chawla, Associate Director, Valuation & Advisory Services, Colliers International India.
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Here we are taking a look at 12 things which you should know about RERA:
1. RERA will set in motion the process of making necessary operational rules and creation of institutional infrastructure for protecting the interests of consumers and promoting the growth of real estate sector in an environment of trust, confidence, credible transactions and efficient and time-bound execution of projects.
2. The Ministry of Housing & Urban Poverty Alleviation notified 69 of the total 92 sections of the Act on Wednesday last week, bringing the Act into force from May 1, 2017, culminating the eight year-long efforts in this regard. A proposal for a law for real estate was first mooted at the National Conference of Housing Ministers of States and Union Territories in January 2009.
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3. As per the notification, rules under the Act have to be formulated by the Central and State Governments within a maximum period of six months, i.e by October 31, 2016, under Section 84 of the Act. The Ministry of HUPA would make rules for Union Territories without legislatures while the Ministry of Urban Development would do so for Delhi.
4. Section 20 of the Act provides that the appropriate Government shall, within a period of one year from the date of coming into force of this Act, by notification establish an authority to be known as the Real Estate Regulatory Authority to exercise the powers conferred on it and to perform the functions assigned to it under this Act. These Authorities shall decide on the complaints of buyers and developers in 60 days’ time. Section 20 of this Act also empowers appropriate Governments to designate any officer, preferably Secretary of the Department dealing with Housing, as the interim Regulatory Authority until the establishment of Regulatory Authority under the provisions of the Act.
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5. The time limits of six months for formulation of Rules and one year for setting up Regulatory Authorities and Appellate Tribunals are the outer limit and the States willing to act quickly could do so and the Ministry of Housing & Urban Poverty Alleviation would notify the remaining Sections of the Act to enable relief to the buyers under the Act as quickly as possible.
6. The remaining 22 Sections to be notified relate to functions and duties of promoters, rights and duties of allottees, prior registration of real estate projects with Real Estate Regulatory Authorities, recovery of interest on penalties, enforcement of orders, offences, penalties and adjudication, taking cognizance of offences etc.
7. Ongoing Projects: All developers will now have to disclose the original sanctioned plans and changes made in the project at the later stage and duration of the time within which they will complete the project.
8. Registration of projects: Each state will set up its own regulatory authority who has the responsibility to register and regulate projects under this Act. No developer can advertise/market the project, apartment or building without registering the project with the RERA authority.
9. Online information: After registering with regulatory authority, “the builder has to update all the project details online on authority’s website and update the same on regular basis in terms of status of the project and other information. This, in turn, will help the buyer to get accurate information about the project and make informed decision while investing in the project,” says Chawla.
10. Project Quality: The quality of construction has been the biggest concern for many homebuyers. “Under RERA, in case of any structural defect or poor quality, it will be the responsibility of the developer to rectify such defects for a period of 5 years,” says Chawla.
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11. Delayed delivery compensation: The developer has to pay penalty in case of delay in giving possession or return the total amount with interest at a defined rate, as mentioned in the agreement of sale, to the homebuyer.
12 Booking amount: Generally, developers ask for 10 per cent of the total cost of property as the booking amount, “but under RERA, the developer cannot ask for more than 10 per cent of the booking amount as an advance without making an agreement for sale,” says Chawla.
(With inputs from PIB)