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Aimed At Taming Project Delays, Real Estate Rules Notified For UTs

Aimed At Taming Project Delays, Real Estate Rules Notified For UTs

Aimed At Taming Project Delays, Real Estate Rules Notified For UTs
(Jagmohan Rawat)

The real estate rules for the Union Territories were notified recently with an aim to put an end to project delays. These endless delays are often a drain on homebuyers' time and money but Real Estate (Regulation and Prohibition) Act, 2016, may put an end such a menace. One of the primary reasons for delays is cash crunch. A rule in the notification says that 70 per cent of the amount collected and unused money has to be kept in a separate bank account to ensure the completion.

Besides, developers will have to furnish additional information regarding the ongoing projects for the benefit of buyers. This includes information regarding the type and number of units, the number of parking spaces, status of the project construction supported by pictures as well as information about common spaces and project infrastructure. The emphasis of RERA, therefore, is clearly for grater transparency. Not only does this help the buyer ascertain the credentials of the developer, it keeps the developer motivated to put his best foot forward. 

As a buyer, you need not be wary of under-construction properties either. The notification reads that projects that haven't received completion certificates will need to come to the fore to make known the original sanctioned plans and changes made to it. In terms of finance, builders must project total amount collected from buyers, how the money has been utilised and the details of timelines. The timelines should be certified by an engineer, architect or a practising chartered accountant. If you are someone who has always found jargons confusing, here is the respite. A promoter must declare the size of the apartment or the carpet area.

If you are someone who has always found jargons confusing, here is the respite. A promoter must declare the size of the apartment or the carpet area. Developers too are in for a good time. Although, a few frown upon RERA, it is more of a corrective measure than a stringent rule. To encourage developers to register their projects and agents to come under the ambit of the regulatory authority, the fee has been halved. For registration of projects, the fee has been reduced to Rs 5 per sq.mt for up to 1,000 sq mt area and Rs 10 per sq mt beyond this limit subject to a maximum of Rs 5 lakh per project. For commercial and mixed development projects, it will be Rs 10 and Rs 15 per sq mt subject to a maximum of Rs 7 lakh. For commercial projects, it will be Rs 20 and Rs 25 subject to a cap of Rs 10 lakh per project. For plotted development, it is Rs 5 per sq mt with a ceiling of Rs 2 lakh.

Developers too are in for a good time. Although, a few frown upon RERA, it is more of a corrective measure than a stringent rule. To encourage developers to register their projects and agents to come under the ambit of the regulatory authority, the fee has been halved. For registration of projects, the fee has been reduced to Rs 5 per sq mt for up to 1,000 sq mt area and Rs 10 per sq mt beyond this limit subject to a maximum of Rs 5 lakh per project. For commercial and mixed development projects, it will be Rs 10 and Rs 15 per sq mt subject to a maximum of Rs 7 lakh. For commercial projects, it will be Rs 20 and Rs 25 subject to a cap of Rs 10 lakh per project. For plotted development, it is Rs 5 per sq mt with a ceiling of Rs 2 lakh.

But, in case of a delay, the developer will be required to pay compensation at an interest rate of the State Bank of India's highest marginal cost of lending rate (MCLR) plus 2 per cent. At present, the MCLR for most banks is in between 9.05 and 9.45 per cent. The penalty would be paid within the period as specified in the sale agreement.

As a buyer, if you have complaints all you need to do is make an appeal to the Real Estate Appellate Tribunal at a proposed fee of Rs 5,000. Those approaching the regulatory authorities or the adjudicating officers will need to pay Rs 1,000.

Highlights of the Act

  • Any violation of the orders of the tribunal will qualify for imprisonment and 10 per cent of the project cost (for developers) and the same per cent for buyers but calculated on the cost of property purchased.
  • Discrimination of any kind (does not include rental market) will meet stringent action.
  • Complaints will be addressed within 60 days.
  • Details of litigations, track record of the promoters should be published on the developer firm's website for free access.

The rules stand true to the Union territories of Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep and Chandigarh. Similar rules are under consideration for other states as well and will soon be notified.

Last Updated: Tue Nov 08 2016

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