Real Estate is an unstructured sector in many ways. To bring some regulation into this sector, the government has introduced Real Estate Regulatory Authority (RERA) Bill, which is supposed to be in favor of the buyers. These days we often come across situations where the buyers don’t get possession of the purchase on time after paying the costs. Real Estate Regulatory Authority (RERA) Bill had been structured back in 2013 under the UPA government in 2013. The bill was introduced by none other than Dr. Girija Vyas. Dr. Vyas at that time had a portfolio of Housing and Urban Poverty Alleviation, which was finally brought into implementation on May 1, 2017.
Housing and urban poverty alleviation (HUPA) minister M. Venkaiah Naidu said, “The Real Estate Act is coming into force after a nine-year wait and it marks the beginning of a new era.” The minister said the law will make the buyer “the king”, while developers will also benefit from the increased confidence of buyers in a more regulated environment.
Registration
The RERA Act, 2017 makes it compulsory for all real estate projects where the land is over 500 square meters, or eight apartments, whether it is residential or commercial to register with the Real Estate Regulatory Authority (RERA) for launching a project. This is mandatory, to provide greater transparency in project-marketing and execution.
Projects which have not received a completion certificate (CC) on the 1st of May 2017 (date of commencement of the Act) will have to seek registration within 3 months.
Applications for registration must be either approved or rejected within a period of 30 days from the date of application by the RERA.
On successful registration, the promoter of the project will be provided with a registration number, a login id, and password for the applicants to fill up essential details on the website of the RERA.
For failure to register, a penalty of up to 10 percent of the project cost or three years’ imprisonment may be imposed.
Real estate agents who facilitate selling or purchase of properties must take prior registration from RERA. Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by the agent in every sale facilitated by him.
Status:
As per the rules, it is mandatory for the states and UTs to set up the authority.
Only 7 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.
Only 5 UTs – Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep – have notified the rules.
While the urban development ministry came out with such rules for the National Capital Region of Delhi.
The other states and UTs will have to come out with their own rules.
Statistics:
As per industry data, real estate projects in the range of 2,349 to 4,488 were launched every year between 2011 and 2015, amounting to a total of 17,526 projects with investments of Rs 13.70 lakh crore in 27 cities, including 15 state capitals. About ten lakh buyers invest every year with the dream of owning a house.
-Live Mint, 23 June 2017
Views of various people
“It will bring a paradigm change in the real estate sector. It will protect buyers who have purchased flats in the past. The regulator under the RERA should find ways to help complete ongoing projects and provide relief to home buyers,” NAREDCO chairman Rajeev Talwar said.
CREDAI president Jaxay Shah said RERA will increase transparency in the sector and boost the confidence of both domestic and foreign investors. However, he said there will be some “teething problems” initially in the implementation of this law. When asked about the impact on prices, Shah said, “Supply will dip during this year but demand will improve as buyers will have increased confidence about investing in the property market.” The real estate prices will remain stable now but rates could rise by 10% in the next six months, he added.
-Live Mint, 23rd June 2017
Benefits
To Buyers:
Though RERA is approved centrally, its implementation is made effective state wise. Every state would need to form a regulatory body to resolve any dispute arising between buyer and builder within 4 months time.
The builder/developer would need to keep 70% of the money taken from the buyer in a separate account to meet the construction requirements at first.
RERA shall ensure the proper completion of the project on time.
Builders have been clearly indicated to define the carpet area including kitchen and washroom space, which was not the case earlier.
The developer is now legally responsible for the restoration of the structural
flaws up to five years, which earlier was up to 2 years only.
These days the builder asks the buyer to pay for the super built-up area (as in the
area which is beyond the walls of the said flat and comes under courtyard
stairs etc. But RERA makes it a mandate for the builders to charge only for the
area which is built inside the walls of the flat.
Under this scheme, builders will have to register their plans with the regulatory body. Also, they’ll have to get their projects (that include more than 8 apartments) registered with the regulatory body before the project even launch.
To Builders:
The builders can anytime approach the regulatory body in case any kind of dispute
arises amongst the two parties.
Many times, it happens with the builders that some party books a flat via giving some token amount but they never come back in time for making the rest of the payments. In that case, too, the builder can seek help from the regulatory body to track the person and ask them to make the payments in full.
In United States of America and the United Kingdom
United States:
Real estate in the US is regulated at numerous levels. There is no single regulatory body, but a series of bodies that regulate different ownership and usage aspects. To safeguard the interest of the end-users, the US Department of Housing and Urban Development (HUD) has rules under the real estate settlement procedures act to protect consumer interests pertaining to residential properties. If a buyer enters a contract with the developer, and the developer does not deliver on the terms agreed upon in the contract, the developer can be taken to court for breach of contract. In the US, there is state real estate licensing laws and a code of ethics in place.
United Kingdom:
There is no regulator to monitor development. The financial services authority (FSA), which is now part of the Bank of England, regulates almost all investments in real estate. The Property Misdescriptions Act, 1991, prohibits making false or misleading statements on property matters during estate agency business and the property development business.
-Hindustan Times, 1st May 2017
Message from the writer:
According to me the most unregulated expensive sector in the country is now regulated by law. The purchasers of the property now need not go to consumer or civil court for years and years if at all there is any complain. Even the developer is protected in the same way. Now people will develop more trust in this sector. The laws will stabilize the prices in this sector and make it affordable for almost everyone.
By Vijay Parekh
Image Source: Money Excel