With the exorbitant price of residential house and moribund real estate market, buying one’s own home is nothing but a distant dream. With the enactment of the Real Estate (Regulation and Development) Act. RERA on 1st May 2016, the real estate market has started to get in good shape. The act addresses the lacunas of the real estate market.
The passing of the Real Estate Bill was long due and stuck in a rut. The bill was first proposed on January 20, 2009, by the National Conference of Ministers of Housing, Urban Development and Municipal Affairs of States and Union Territories. After a hold up of eight long years, finally, Rajya Sabha passed the bill on March 10th 2016, Lok Sabha on March 15th 2016 and President of India conferred his assent to the RERA bill on March 25th 2016.
RERA Rules are to be devised within a maximum period of six months i.e. by October 31, 2016, by the Central and State Governments under Section 84 of the Act, Rules for Union Territories without legislatures and for Delhi will be made by Ministry of HUPA and the Ministry of Urban Development respectively.
Real Estate Regulatory Authority (RERA) is to be established within a period of one year from the date of coming into force of this Act. These Authorities shall decide on the matter relating to the complaints of buyers and developers within 60 days time.
The functions of RERA are regulation and promotion of the real estate sector and to ensure the sale of plot, apartment or building, or sale of real estate project, in an efficient and transparent manner, and to protect the interest of consumers in the real estate sector. The law allows homebuyers to file a complaint under RERA against a builder.
Within three months time after its constitution, the Regulatory Authorities is required to formulate regulations concerning their day-to-day operation under Section 85 of the RERA Act.
Similarly, Section 43 provides for the formation of the Real Estate Appellate Tribunals by April 30, 2017. All the cases of appeal challenging the orders of Regulatory Authorities are to be decided by the fast track Tribunals in 60 days time.
If the project land is owned by another person, in such cases a Declaration is to be made by the promoter with respect to the legal title to the project land or authenticate the validity of title. There is a need to obtain insurance for title and buildings alongside construction insurance by the promoter.
No charge or encumbrance on an apartment can be created by the promoter after executing an agreement for the same. The right and interest of the concerned consumer will not get affected if such charge or encumbrance is created.
Menacing issue of the use of unaccounted money for buying the real estate will be taken care of by this act as at the moment 70 per cent of the money has to be deposited in bank accounts through cheques. Though this will lead to increased promoter reliance on private equity or bank finance leading to an escalation in project costs and the real estate buyers will ultimately bear the brunt. But it will also ensure that the project money is not invested in the new projects and would pave the way for faster completion as well as timely delivery of possession to the buyers.
Builders will have to quote prices based on carpet area and not a super built-up area which will prove to be in favour of the consumers, the Act defines carpet area to include usable spaces like kitchen and toilets. Other key terms have also been defined in the act such as ‘building’, ‘promoter’ etc.
To keep the fraudulent practices at bay, mandatory registration of real estate agents and projects is required which can be revoked in case of evident sham practices. All residential or commercial real estate properties that are over a minimum area of 500 sqm or have more than eight flats fall within the ambit of the legislation and these comprise project beyond urban areas.
Builders who do not abide by the ruling of the appellate tribunal may be imprisoned for up to three years and/or fined. At the same time, buyers and real estate agents cannot scot-free if they do not abide by the ruling of the appellate tribunal and are liable for up to one-year imprisonment or/and a fine.
Though for the proper implementation of the RERA act, another year is required, but the passing of act has already caused turbulence within the builder circle as they are trying to hasten the completion of pending projects so as to avoid the wrath of RERA.