Real Estate (Regulation & Development) Act, 2016 (RERA) Takes Effect From Today Monday May 01,2017

In a bid to revive confidence in the real-estate sector the government will implement the Real Estate (Regulation & Development) Act, 2016 (RERA) in full from Monday May 01,2017

“Developers shall get all the ongoing projects, which have not received completion certificate, and the new projects registered with regulatory authorities by July end.

“This enables the buyers to enforce their rights and seek redress of grievances,” an official statement said.

The new regulation will apply to over 76,000 companies across the county. Minister of Housing and Urban Poverty Alleviation M Venkaiah Naidu, in a series of tweets, said, “The Act ushers in the much desired accountability, transparency and efficiency in the sector, with the Act defining the rights and obligations of both the buyers and developers.”

In addition to mandatory registration of projects and real estate agents, the Act mandates depositing 70 per cent of the funds collected from buyers in a separate bank account in case of new projects and 70 per cent of unused funds in case of ongoing projects.

Further, projects with a plot size of at least 500 square metres, or eight apartments should be registered with regulatory authorities.

In addition to this, both developers and buyers will pay the same penal interest of SBI’s MCLR (marginal cost of lending rate) plus 2 per cent in case of delays. Developers will be liable for structural defects for five years.

Act Highlights

Projects with plot size of minimum 500 sq.mt or 8 apartments shall be registered with Regulatory Authorities.

-The developers will now have to get the ongoing projects that have not received completion certificate and the new projects registered with regulatory authorities within 3 months from 1 May.

-Depositing 70% of the funds collected from buyers in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects.

-Both developers and buyers to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays.

-In case of project delays, the onus of paying the monthly interest on bank loans taken for under-construction flats will lie on developers unlike earlier, when the burden fell on home buyers.

-All developers are required to disclose their project details on the regulator's website, and provide quarterly updates on construction progress.

-Liability of developers for structural defects for five years: RERA also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter, without any further charge, within 30 days. If the promoter fails to do so, the aggrieved allottee is entitled to receive compensation under RERA.

-Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.

Note

 The Real Estate (Regulation and Development) Bill, 2016 was passed by Parliament in March last year and all the 92 sections of the Act come into effect from May 1 However, only 13 states and UTs have so far notified the rules. 

The states that have notified the rules are Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Maharashtra, Madhya Pradesh and Bihar. The Housing Ministry had last year notified the rules for five Union Territories —Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep, while the Urban Development Ministry came out with such rules for the National Capital Region of Delhi.