 "Real estate law: Too soon to celebrate")
The Real Estate (Regulation and Development) Act or RERA, which protects the interest of home buyers, is finally seeing the light of day. But, full implementation is still many years away, feel experts.
Keeping up with the deadline to operationalise RERA from November 1, the central government has notified it for five Union Territories (UTs) - Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep and Chandigarh. None of the states, except Gujarat, have met the deadline.
"Operationalising RERA is a huge bureaucratic exercise. States need to start from the scratch. They need to first finalise the changes to the Act, identify people, set up offices and other infrastructure. It will take some months before majority of the states implement RERA," says Gulam Zia, executive director - advisory, retail and hospitality, Knight Frank.
But, the good news is buyers can now be sure of what to expect once states operationalise RERA, as it will be based on the framework that the Centre has notified for the UTs. "Though RERA is a state subject, state governments can only tweak it to make it more stringent," says Ashutosh Limaye, national director (research), JLL India. RERA states that all project of 20,000 square feet or more will be automatically covered under the Act. States can reduce this area to wider the ambit. But, they cannot dilute it by increasing the project size. RERA will apply to all on-going projects without a completion certificate.
RERA promises to take care of all the major hassles that buyers face. Realtors have to make disclosures about every single aspect of project. This gives buyers enough information and proofs to take developers to task. Developers need to list the project, give the details of original sanctioned plan, changes made, the total funds collected from buyers, actual money spent, and so on. In fact, buyers will also be able to check progress of the project regularly, as RERA mandates builders to report quarterly progress with photographs and even provide sales details.
To curb diversion of funds to another project, a developer needs to keep 70 per cent of the unused funds collected for a particular project in a separate bank account. "This alone can resolve many issues that buyers are presently facing," says Mudassir Zaidi, managing partner, SNZ Business Essentials. The Act has defined the penalty that developers can charge for late payments and buyers can seek for project delays. The penalty is two per cent above the State Bank of India's Marginal Cost Lending Rate. Now, it works out to 11.05 per cent.
ADDITIONAL FEATURES
Keeping up with the deadline to operationalise RERA from November 1, the central government has notified it for five Union Territories (UTs) - Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep and Chandigarh. None of the states, except Gujarat, have met the deadline.
"Operationalising RERA is a huge bureaucratic exercise. States need to start from the scratch. They need to first finalise the changes to the Act, identify people, set up offices and other infrastructure. It will take some months before majority of the states implement RERA," says Gulam Zia, executive director - advisory, retail and hospitality, Knight Frank.
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Zia feels it will take around two years before states are able fully to implement RERA. Buyers should not expect that as soon as their states notify the Act, developers will fall in line. "Realtors will take time to meet the rules, regulations, disclosures and compliances mandated by the Act. States may give them a few chances and deadline extensions to comply," says Zia.
But, the good news is buyers can now be sure of what to expect once states operationalise RERA, as it will be based on the framework that the Centre has notified for the UTs. "Though RERA is a state subject, state governments can only tweak it to make it more stringent," says Ashutosh Limaye, national director (research), JLL India. RERA states that all project of 20,000 square feet or more will be automatically covered under the Act. States can reduce this area to wider the ambit. But, they cannot dilute it by increasing the project size. RERA will apply to all on-going projects without a completion certificate.
RERA promises to take care of all the major hassles that buyers face. Realtors have to make disclosures about every single aspect of project. This gives buyers enough information and proofs to take developers to task. Developers need to list the project, give the details of original sanctioned plan, changes made, the total funds collected from buyers, actual money spent, and so on. In fact, buyers will also be able to check progress of the project regularly, as RERA mandates builders to report quarterly progress with photographs and even provide sales details.
To curb diversion of funds to another project, a developer needs to keep 70 per cent of the unused funds collected for a particular project in a separate bank account. "This alone can resolve many issues that buyers are presently facing," says Mudassir Zaidi, managing partner, SNZ Business Essentials. The Act has defined the penalty that developers can charge for late payments and buyers can seek for project delays. The penalty is two per cent above the State Bank of India's Marginal Cost Lending Rate. Now, it works out to 11.05 per cent.
ADDITIONAL FEATURES
- RERA prohibits any discrimination in sale of properties
- Brokers also covered under the Act
- Fee for making a complaint to the regulator is Rs 1,000 and to a tribunal is Rs 5,000
- For disobeying orders of the tribunal, both developers and buyers can be imprisoned
- All units need to be sold by carpet area
- Also covers buyers for after-sales service up to one year