BENGALURU: The state government has come out with a draft notification on Real Estate (Regulation and Development) Act (RERA) and has asked real estate developers to submit their suggestions on the same within November 10.
The state government has kept the rules in tandem with the Centre’s rules, including 70% of the project revenue to be kept in an escrow account and property to be sold on carpet area.It has also said that the builder will have to take insurance on the title of the property, land litigation should be made available to the public, among others.
“RERA will work well if there is a level-playing field for all concerned. Else it will not serve the purpose it is meant to. Overcompensation to negate issues will not help,“ said Koshy Varghese, managing director at Value Designbuild, a builder.
The Union government on Monday has notified the final rules to implement the RERA that aims to bring transparency and set accountability in the sector and help complete stal led projects. While Union Territories will have to adopt the Centre’s rules, states can modify the Union RERA rules.
Karnataka Real Estate (Regulation and Development) Rules, 2016 states that 70% of the amounts realised by the builder for the real estate project from the home buyers shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.
Builders can only withdraw money in proportion to the percentage of completion of the project.
Suresh Hari, secretary , Karnataka chapter of Confederation of Real Estate Association of India (CREDAI) said, “There are few sections that need to be properly implemented in the rules, though the spirit of the act is very appreciable. The draft rule has been put up and the association is looking at filing necessary input suggestion. CREDAI would like all to be part of the act and the sanctioning authority is not part of the act in the present form. It needs to be looked into and the rules framed accordingly .The industry expects all sizes of developments to be bought into the ambit of the act.“
The state Real Estate (Regulation and Development) Act, 2016 will come into force on May 1 starting the process of making operational rules as well as putting in place institutional infrastructure to protect the interests of consumers and promote the growth of the real estate sector in India. Union government has given October 31 as deadline to state government to formulate their own rules.
The state government also said that builders will have to sell flat on carpet area henceforth. However it will not be applicable for projects that have been already sold. If there is any reduction in the carpet area within the defined limit then builder shall refund the excess money paid by the buyers within 45 days with annual interest at the rate specified in the rules, from the date when such an excess amount was paid.
“Going forward, sales will happen on carpet area and this will benefit homebuyer considerably in simplified approach and clarity on what you get for the payment made. Industry will see consolidation and apartment prices will move up due to increased compliance cost and new standards under the RERA,“ said Om Ahuja, CEO (Residential) at Brigade Group.
Credits ET Realty