Impact of RERA on Real Estate Industry

1. O^^€ Q Menu ▼ Impact of RERA on Real Estate Industry ©October 25, 2017 & Real Estate # Impact of RERA on Real Estate Industry,RERA on Real Estate,RERA on Real Estate Industry 1 Srishti Chandola ifc Like 0 The Indian Government enacted Real Estate (Regulation and Development) Act 2016 on 26th March 2016 and its provisions came into effect on 1st May 2017. The developers have been given time period by end of July 2017 to get their projects registered under RERA. Similarly, the real estate agents who fall under its realm are still in process of registering themselves. Various states are yet to notify the rules under the act as well as it is most important for the buyers, promoters/developers need to register the projects under RERA. What is Real Estate Regulatory Act? The Real Estate (Regulation and Development) Act, 2016 is an Act that seeks to safeguard the interests of the home buyers along with boosting the investments in real estate sector. Under this act, the state and central governments need to notify their own rules on basis of model rules that are framed under central Act. Why RERA? For many years now, the home buyers have complained about the real estate transactions that were lopsided as well as heavily in favor of builders or developers. The government's model code and RERA aim to create more equitable as well as a fair transaction between the buyers and the sellers of properties, especially in the major market. It is hoped, RERA will make the real estate purchase pretty easier by bringing better transparency and accountability that provided the states do not dilute provisions and spirit of the central act. RERA provides the Indian real estate market its prime regulator. The Real Estate Act makes it compulsory for all the state and union territory to form their own regulator as well as frame the rules that will be governing the functioning of the regulator. Impact of RERA on home buyers

2. Come of necessary compliance are: ■ Informing the allottee about minor alteration or addition ■ No advertisement or launch before registration with RERA ■ Consent of 2/3rd allottee regarding any other alteration or addition ■ Sharing information project plan, government approvals, layout, sub-contractors, land title status ■ Consent of 2/3rd allottee for moving popular rights to the 3rd party ■ An increase in quality construction owing to defect liability period of 5 years ■ Increased assertion on timely completion of delivery and projects to consumers ■ Forming of RWA with specified time or the 3 months after the majority of the units have been sold The positive aspect of Act is that it gives unified legal regime for the purchase of apartments, flats, etc. as well as seeks to standardize practice across India. Below are some key highlights of the Act: Establishment of regulatory authority The absence of proper regulator such as Securities Exchange Board of India for capital markets in real estate sector was felt long. The Act establishes Real Estate Regulatory Authority in all union territory and state. It is the functions include protection of interests of stakeholders, collecting the data at designated repository as well as creating the robust grievance redressal systems. To stop time lags, the authority has been instructed to dispose of the applications within a maximum period of over 60 days, as well as similar needs to be extended only if the reason is recorded for the delay. Furthermore, Real Estate Appellate Authority (REAT) shall be a suitable forum for the appeals. Compulsory registration As per the central act, all the real estate project where complete area be developed exceeding 500 square meters or more than 8 apartments are proposed in the developed in phase, must be registered with the respective state’s RERA. The present projects where completion certificate or the occupancy certificated has not been issued, necessarily have to comply with registration requirements under this Act. When applying for the registrations, the promoters, schedule of completion, approvals, etc. Only when the registration is finished along with other approvals related to the construction are in place, a project can be marketed. Reserve account One of the major reasons for the delay in the projects was that the funds that are collected from one project were invariably diverted to fund a different and new project, altogether. To prevent this diversion, the promoters are required to park over 70% of the project receivables into a different reserve account. Proceeds of such account can be used for land as well as construction expenses only and will require certification by professionals. Continual disclosures by promoters After the execution of RERA, the property buyers are able to screen the progress of their project online as the builder will require making the periodic offer to regulator in regard with the progress of projects. Title representation Now, the promoters are required to make a positive warranty on the correct title as well as interest on the land which certainly can be used afterward against him by home buyers, if any title defect is discovered. Also, they need to get the insurance against title as well as the construction of the projects proceeds which shall go to allottee upon the execution of sale agreement. Standardization of sale agreement The act recommends that a standard model agreement of sale is to be entered between

3. the home buyers and promoters. Also, the builder or developer needs to insert disciplinary clauses against the home buyers which will penalize them for defaults while alike defaults by the developer or builder attracts to no penalty or negligible. All the panel clauses could be well, a thing of the past as the property buyers can look ahead to a balanced and sensible agreement in the future. Penalty To make sure that the violation of RERA is not taken lightly, a stiff monetary penalty which in up to 10% of the complete project cost as well as the imprisonment has been decided against the violators. Impact of RERA on the real estate industry ■ Initial backlog ■ Tight liquidity ■ Increased cost of project ■ Rise in capital cost ■ Increase in project launch time ■ Consolidation Originally, a lot of work is done for getting existing new project registered. Details like the status of the entire project performed in the past 5 years, detailed execution plans, promoter details, etc. certainly need to be prepared. With the arrival of RERA, some specialized forum like State Real Estate Regulatory Authority as well as Real Estate Appellate Tribunal will be recognized for resolution of the disputes that are pertaining to the home buying and aggrieved party will have no option to other consumer forums as well as the civil courts on various matters. RERA certainly is set for the fast-tracking dispute resolution, the litmus test for the success will completely depend on the timely settings of new dispute resolution bodies as well as how the disputed or differences will resolve expeditiously with a degree of finality. ^ Impact of Kitchen Remodeling on Home Value Leave a Reply Your email address will not be published. Required fields are marked * Comment Name * Email * Website Post Comment

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