Driving Transparency & Accountability with Real Estate Regulatory Act (RERA)

Transcription

1 Driving Transparency & Accuntability with Real Estate Regulatry Act (RERA)

2 CONTENT Understanding RERA 3 - Definitin & Objectives Features f RERA 4 - RERA Overview Hw des a builder make a prject RERA cmpliant? When can a buyer take actin against a builder/ prmter? - What can nncmpliance lead t? Advantages f RERA 8 - Advantages fr the Real Estate Industry - Advantages t Buyers - Advantages t Develpers Impact f RERA 12 Abut msupply.cm - Rle f msupply.cm t help yu becme RERA cmplaint

3 Understanding RERA RERA stands fr Real Estate Regulatin Act. It is an act which was frmulated t better manage the unregulated real-estate sectr. With the prime bjective f safeguarding the interest f buyers and instilling transparency and credibility int the unregulated real estate sectr, the Bill was passed by the Rajya Sabha n March 10, 2016, and by Lk Sabha n March 15, The Act was finally executed n May 1, RERA has been implemented t achieve fllwing bjectives: T prtect interest f cnsumers in real estate sectr and ensure accuntability twards buyers Infuse transparency, ensure fair-play and reduce frauds & delays Intrduce Pan-India standardizatin with prfessinalism Establish symmetry f infrmatin between the prmter and buyer Impse certain respnsibilities n bth prmters and allttees Establish regulatry versight mechanism t enfrce cntracts Establish fast- track dispute reslutin mechanism Prmte gd gvernance in the sectr in rder t create investr cnfidence Challenges faced by buyers: Selling f flats multiple times t different parties Delay in giving pssessin t the buyer which happens due t varius reasns and malpractices such as funding crisis, demanding additinal charges in the name f facilities, reducing carpet area, changing the plans f the scieties etc. Cntracts made are ne-sided in the favur f the develper. E.g. Buyers are charged a penalty f 21% fr a day s delay in payment A Real Estate Regulatry Authrity is t be frmed by the Centre and States t versee the activities f the sectr. The respnsibility f Authrities is t address the cmplaints f buyers and sellers (develpers) in a stipulated time (60 days). 3

4 Key features f RERA are: Every prject is mandated t be RERA cmpliant. The key features f RERA are: 1. Registratin: All prjects, residential and cmmercial, have t be registered with the Regulatry Authrity befre cmmencing bking, selling r ffering them fr sale. Fr prjects which are t be prmted in phases, each phase will be cnsidered as a standalne prject, and each prject has t be registered separately. Registratin fr n-ging prjects: All n-ging prjects which have nt received a cmpletin certificate have t be registered t the Regulatry Authrity fr registratin within a perid f three mnths f the cmmencement f the Act. (May 1, 2017) Exceptins frm Registratin The belw prjects may be exempted frm registratin with the Regulatry Authrity Prpsed land area des nt exceed 500 sq. mts N. f apartments des nt exceed eight units Prjects which have already received the cmpletin certificate prir t the cmmencement f the Act Prjects under renvatin, repair r re-develpment which d nt invlve marketing, advertising, selling and new alltment fr any apartment plt r building. 2. Pst Registratin: Once the prmter has applied fr registratin, the Regulatry Authrity shall within a perid f 30 (thirty) days, either grant r reject the registratin. Registratin Granted: Upn granting a registratin, the prmter will be prvided with a registratin number which shall include a lgin ID and passwrd. The same is prvided fr accessing the website f the Regulatry Authrity &create a web page. All the requested details f the prject are t be filed by the prmtr. Registratin Validity: The registratin, if granted, is valid until the perid f cmpletin f the prject as cmmitted by the prmter t the Regulatry Authrity. An extensin f maximum ne year shall be extended by the Regulatry Authrity, nly n specific reasns as mentined in the Act and alng with the payment f such fee as may be specified by the Regulatry Authrity. 3. Carpet Area: Units can nly be sld n the carpet area, which is the area cvered by the internal partitin walls f the apartment. This means that the areas cvered by the external walls, areas under services shafts, exclusive balcny r veranda area and exclusive pen terraces are excluded and cannt be charged. 4

5 4. Separate Escrw Accunt fr Each Prject: A prmtr has t maintain a separate escrw accunt fr every prject. 70% f the fund cllected has t be kept in this escrw accunt, which is with a scheduled bank. This amunt can be withdrawn frm time t time, in prprtin t the percentage f prject cmpletin. All accunts have t be duly audited within six mnths after the end f every financial year. This is dne t verify that the amunts have been used crrectly and withut any default by the prmter. 5. Revcatin r Lapse f Registratin: The Regulatry Authrity may revke the registratin if they are satisfied that the prmter/develper has cmplied with the belw: A cmplaint receivedfr prmter/develper is true Prmter/develper vilates any terms f the apprvals in the prject Prmter/develper is invlved in any kind f unfair trade practice 6. Advertisements/Prspectus: Any ad/ prspectus f the prject must include the website f the regulatry authrity alng with the prject registratin number r any ther imprtant detail. This is imprtant fr custmers/ investrs t knw the prject details befre investing. Incrrect infrmatin: If a persn has made advance payments fr a prject based n the ads/ prspectus, which is fund t be misrepresenting, and if the persn suffers any damage/ lss, they are t be cmpensated by the prmter in the manner as prvided under the Act. The persn can als withdraw the entire amunt frm the prject as per their wish. 7. Advance Payment: The prmter can accept a maximum f 10% as the advance payment r an applicatin fee, frm a persn prir t entering int a written agreement f sale/ registering the said agreement f sale, under any law fr the time being in frce. 8. Additin and alteratin in the plan: The prmter can t make any additin r alteratin in the apprved r sanctined plans/ designs/ specificatins and amenities f the apartment/ plt r building withut the previus cnsent f the allttee. The prmter als cannt make any ther additin r alteratin in the apprved r sanctined plans/ designs/ specificatins f the apartment/ plt/ buildingr cmmn areas within the prject withut the previus written cnsent f at least 2/3rdf the allttees, ther than the prmter, wh have agreed t take apartment/ plt r building. 5

6 9. Structural defects: It is the respnsibility f the prmter t rectify any structural defect which is brught t the ntice f the prmter within a perid f five years by the allttee frm the date f handing ver the pssessin f the unit. The prmter shall rectify such defect withut any further charge, within thirty days. If the prmter fails t rectify such defect within such time, the aggrieved allttee shall be entitled t receive apprpriate cmpensatin in the manner as prvided in the Act. 10. Restrictin n transfer and assignment: In rder t transfer r assign his rights and liabilities in respect f a prject t a third party, a prmter must have the fllwing cnsent: Prir written cnsent frm tw-thirds f the allttees Prir written apprval f the Regulatry Authrity 11. Pssessin Delays: In case f delay in n-time handing ver f the prject, the prmter is liable t return the amunt received with interest and cmpensatin (Rate as per the Act.) Adjudicating Officer (wh is r has been a district judge)is appinted in case f pssessin delays fr adjudging the cmpensatin t be paid by the prmter in default. The Regulatry Authrity shall appint (in cnsultatin with the apprpriate Gvernment) ne r mre judicial fficers fr the same. The Real Estate Appellate Tribunal The act prpses t establish a Real Estate Appellate Tribunal (Appellate Tribunal) within ne year frm the date f cmmencement f the Act. This tribunal shall dispse all cmplaints/ issues within a perid f 60 (sixty) days frm the date f receipt f appeal. Hw des a Builder/ Prmter make a prject RERA cmpliant? Every builder/prmter needs t ensure that the prject is RERA cmplaint. In rder t d s, he must adhere t all the prvisins f the RERA Act. One must understand that the RERA Act has been passed t intrduce transparency and haccuntability in the real-estate sectr. While it des s, it is als in favur f empwering the buyers, wh have many ways available at their dispsal, t take actin against a prmter. 6

7 When can a buyer take actin against a builder/ prmter? Buyers have becme mre empwered after the cmmencement f the RERA Act. They can nw take legal actin against a develper wh is liable t cmpensate the buyer in any f the belw scenaris: An advertised prject is nt registered with the state regulatry authrities Incrrect and misrepresenting infrmatin has been presented t the buyer Buyer is being charged n the built-up area and nt n the carpet area Prject plan has changed by the prmter withut the cnsent f majrity (2/3rd) f the allttees Prject is nt handed ver n time Apartment witnesses structural defects within 5 years f handing ver Penalties in case f Nn Cmpliance/ Nn- Registratin Nn-cmpliance with RERA rules will attract penalties fr all stakehlders including develpers, prmters, agents and buyers. Belw are the penalties which nn-cmpliance/nn-registratin can lead tat different instances 10% penalty f the estimated cst f the prject fr nn-registratin f prject: A cntinued vilatin can further attract an imprisnment f up t three years and 10% penalty f the estimated cst f the prject. Revking the Registratin in case f defaulting/ vilating any apprval given by the cmpetent authrity: In case f vilatin f any f the terms & cnditins f the apprval given by any cmpetent authrity r any kind f unfair trade practice, RERA hlds the right t revke the registratin f a prject, builder, prmter r agent. 5% penalty f the prject cst n agent and prmter if they prvide any false infrmatin r cntravene any prvisins under the Act Failure t cmply will lead t increase in the penalty t 10% f the prject cst and r imprisnment f upt ne year. 5% penalty n the cst f apartment/prperty, if an allttee fails t cmply with r cntravene any rders, decisins r directins f the Authrity The penalty can g up t 10% f the cst f apartment/prperty r lead t an imprisnment f up t ne year in case f nncmpliance with the rders r decisins f the Appellate Tribunal. 7

8 Advantages f RERA RERA was frmulated t better manage the unregulated real-estate sectr with the prime bjective f safeguarding the interest f buyers and instilling transparency and credibility int the unregulated real estate sectr. The RERA has many advantages fr all the stakehlders including the Real Estate Sectr in itself. Advantages fr the Indian Real Estate Sectr: Quick and Transparent Prcess RERA is expected t deal with all the issues and cmplaints within 60 days. Such a timeline has never existed in the previus acts in real estate regulatins. All prject infrmatin including but nt limited t layut, apprval status, cntractr details, schedule f prject,cmpletin timelines, will be available with the RERA authrity. The cnsumers will be readily prvided with all infrmatin prir t any queries abut the prjects. Standard Prperty Rankings The RERA authrity will als be invlved in grading prperties, which will directly help cnsumers t deal in real estate market with cnfidence. Nw with clear prject details, cnsumers will deal withut any fear. Cmmn Rules Pan India In case f residential prperties, RERA registratin is mandatry fr all prjects greater than 500 sq. mt. area r thse buildings with mre than eight units. RERA t Bst Real Estate Sectr RERA is expected t bst the real estate sectr as it is aimed at brining in greater transparency and accuntability. This in-turn will lead t mre freign investments in the real estate sectr. N Obligatin r Influence n Decisins Psitive changes are expected with transparent and effective functining f this sectr as the RERA authrity has full financial and administrative independence t aid in fr regulatins. Swift Transactins Real estate transactins wuld be as easy as pening a bank accunt after state RERA becmes effective with necessary prcesses in place. 8

9 Online Medium RERA will have all the infrmatin n the nline medium. This will nt nly help the Real Estate Sectr, hwever all the crrespnding segments f markets like Banks, Insurance cmpanies, Law firms will benefit frm this. Indian Ecnmy The fluency f exchanges in this sectr will help build a seamless platfrm fr the Indian Ecnmy as a whle. This will benefit all custmers, agents, develpers, investrs, public and private sectr cmpanies invlved in real estate transactins. 9

10 Advantages t Buyers: The interest f buyers is prtected by the RERA. The RERA has been implemented with the sle mtive t make this sectr mre transparent and accuntable t the buyers. Timely delivery f the prjects Buyers t pay n carpet area and nt n built-up area 5-year warranty against any cnstructinal defects All clearances are mandatry befre beginning a prject. Develpers will nly be able t sell pst registratin, which invlves clearance Discriminatin prhibited: N buyer can be rejected n the basis f caste, gender r religin Furnishing f accurate prject details by develper/prmter Security f buyers mney: Builders have t transfer 70% f the prject mney received in an escrw accunt and they are accuntable fr every withdrawal Quick grievance redressal (within 120 days) fr any dispute between a buyer and a prmter N change in prject plan withut the cnsent f at-least 2/3rd f the buyers f the prject Advantages t Prmters: With all the fcus n transparency and accuntability, it is nt nly the buyers wh stand at an advantage. The advantages fr prmters are plentiful. Decrease in unccupied prperties RERA mandates the cnsumers t take the pssessin f the unit within tw mnths f issuance f the ccupancy certificate. This will decrease the number f unccupied prperties On time payments frm buyers As per RERA, the cnsumers must make the payments n time t the real estate develper as per the agreement. They shuld als pay the share f registratin charges, municipal taxes, maintenance charges, grund rent, electricity charges, water supply charges etc. Increased investments RERA willinfuse transparency, ensure fair-play and reduce frauds & delays. This will bst cnfidence amng cnsumers and increase investment in the sectr. 10

11 Enhanced husing demand The Act is anticipated t fuel husing demand and, thus, accelerate absrptin f unsld husing units. Hence, develpers will be the immediate beneficiaries f the renewed cnfidence in the sectr. Increased value fr the established and reputed builders As per the RERA act, builders have t invest 70% f the amunt cllected frm the cnsumers in the planned prject thus there will be very less scpe f pre-investing in upcming prjects. This will reduce the number f Fly by Night realtrs and the value f reputed builders wh d their business unambiguusly will increase. 11

12 Impact f RERA In the shrt-term, the transparency and credibility assciated with RERA has resulted in maintaining the prices in spite f high supply. Buyers have returned t the market with a new enthusiasm, pst RERA implementatin, which has kept the market stable. In the mid-term, the sectr is expected t gain mre cnfidence f the investrs and the buyers. Thugh there will be many price cmpetitive ptins available t the buyers, the prices are expected t the ratinalised in the mid-term. In the lng term, the prices are expected t rise. This will be due t additinal csts pertaining t registratin and apprvals under RERA. The price hike will be driven by mandatry requirements like escrw accunt, check n the sale f pen car parking spaces and built-up area. Abut msupply.cm msupply.cm is India s largest B2B cmmerce cmpany fr cnstructin, infrastructure, interirs, industrial, manufacturing, MRO related prducts and materials. Funded in 2015, and headquartered in Bangalre, we ffer e-prcurement slutin fr buyers (Builders, SMEs, Crprates, infra cmpanies, peple wh are cnstructing hmes, apartments, cmmercial cmplexes etc.) in Cnstructin, Infrastructure, Industrial, Manufacturing, and SME segments by cnnecting them with whlesalers and manufacturers. Additinally, msupply.cm partners with buyers and suppliers by helping them secure business financing ptins t prcure materials, prducts, equipment, services and ther prject/ wrking capital related lans via its netwrk f banks and NBFCs that it has partnered with. 18,000 + Verified Suppliers 30 Lakh+ Prducts 1,000+ Brands 12

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