Recently, there were some media reports that the Real Estate (Regulation and Development) Act (RERA), 2016 would be amended in some states. For the end users, this could mean that the Act becomes biased towards developers. However, M. Venkaiah Naidu, housing and urban poverty alleviation minister, has said that the Act will be implemented in letter and spirit. But why is this statement important? Let’s take a look.
Implementation is near
RERA is to be implemented from 1 May 2017, as proposed in the Act. For this to happen, all state governments were to put in place the Act’s rules and regulations for their states. The last date to do so was 30 October 2016, but most states missed it. To prepare for launching the Act, the minister had held a meeting with chief secretaries and senior officials of states and Union Territories. Various other aspects related to the Act were also discussed.
Subsequently, in a press note released on 17 January, the ministry clarified several issues and took note of rumours that the Act may be amended by states. It also quoted the minister: “There are some media reports that some states have diluted some provisions of the Act in the Rules notified by them. States don’t have such powers and I hope such reports are not true. Today, I want to make it clear that any compromise with the spirit of the Act will have serious implications including public outcry. Whoever does so will have to face the public outcry.”
“I expect the states and the Union Territories to rise to the occasion and ensure implementation of the Act from May this year as proposed in the Act by taking necessary measures in time,” said Naidu.
Apart from Union Territories, the real estate rules have been notified by states such as Gujarat, Madhya Pradesh, Maharashtra and Uttar Pradesh. The ministry press release said, “Andhra Pradesh, Arunachal Pradesh, Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Mizoram, Rajasthan, Tamil Nadu and Puducherry would notify the real estate rules next month.” Punjab and Uttarakhand will notify the rules after assembly elections.
Many homebuyers have deferred their buying decision till the Act gets implemented, as it protects their rights.
The Act provides a speedy dispute resolution mechanism, in case of default by developers. Moreover, it stipulates the compulsory registration of all the residential real estate projects with the regulator, where plot sizes are more than 500 sq. metre. This also applies to under-construction projects that have not received completion certificates by 1 May 2017.
The developer has to declare to the authority all details related to the project such as: names of promoters, project layout, plan of development works, land status, status of statutory approvals, draft of builder buyer agreements, and names and addresses of real estate agents and contractors.
All this information has to be regularly updated and made available to buyers on the regulator’s website. The regulator website will also carry a list of developers who have defaulted, which will help homebuyers to stay away from them. Besides, the developer has to mandatorily deposit 70% of the money collected from homebuyers in an escrow account, for the particular project.
The Act also does away with the practice of selling apartments on the basis of super built-up area.
It stipulates that apartments can only be sold on the basis of carpet area. In the press release, the ministry also clarified that balconies will form part of the carpet area, saying: “it posed no problems as costing could be accordingly informed to the buyers.”
Though developers and other stakeholders have been demanding changes in some aspects of the Act, the ministry clarified that “no amendments to the Act would be considered at this stage since full implementation of the Act would begin only in May this year when Real Estate Regulatory Authorities and Appellate Tribunals would become functional.”