What is RERA 2016?
The Real Estate (Regulation & Development) Act, 2016 has been put into effect with regards to introducing transparency and boost investments in the real estate industry.
RERA has been notified and is applicable to the five Union Territories without legislature viz. Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman and Diu, Lakshadweep and Chandigarh. Amongst the States; Uttar Pradesh and Gujarat have notified the Rules recently. The states such as Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu are believed to have finalised the rules, but have not notified them as yet. The state of Haryana has designated the Chief Secretary as an interim Real Estate Regulatory Authority for addressing disputes, if any, but has not notified the same, as yet.
Along with providing benefits to the consumers, RERA also intends to
- Weed out fly-by-night operators from the sector;
- Infuse credibility by making the sector mature on the lines of securities, banking, insurance, etc. with channelizing the investment into the sector;
- Lead to transparency resulting in major foreign investments
Is RERA applicable to on-going/ existing real estate projects?
The Central Law, which is binding on all states, does not differentiate between on-going and future projects for registration. However, it provides for registration of incomplete projects within three months from the commencement of the Act.As per the provisions of the Act, ongoing / existing projects, which have not received completioncertificate, are covered under the Act.
What are the rules notified in Uttar Pradesh that are different from the Central Law?
The state of UP has come up with four exemptions to exclude incomplete projects from the category of “ongoing projects” i.e. where:
- Services have been handed over to the local authority for maintenance,
- Common facilities have been handed over to the Resident Welfare Associations.
- All the development works have been completed and sale/lease deeds of sixty percent of the apartments/houses/plots have been executed; or
- Application has been filed with the authority for issuance of completion certificates.
What are the rules notified in Gujarat that are different from the Central Law?
- All projects that were launched before the Rules were notified have beenexcluded from the category of ‘on-going projects”.
- Developers do not have to divulge their income tax returns, as stipulated earlier in the draft rules.
- Registration for individual is Rs 10,000/- and Rs 50,000/- by other entities (as against Rs 25,000 and Rs 2.50 lakh as proposed in the draft rules).
- Developers will also have to declare size of the apartment based on carpet area even if it was earlier sold on any other basis.They also have to declare information regarding the number of open and closed parking areas in the project.
- The developer, within three months of applying for registration of a project with the Real Estate Regulatory Authority, shall deposit in a separate bank account.
How will RERA impact the real estate Sector?
RERA protects the interest of the buyers in the real estate sector and also establishes an adjudicating mechanism for speedy dispute redressal. The implementation of RERA will pose a big challenge in the initial few years and may drastically reduce the number of players in the real estate market in a phased manner.
Builders are required to upload on the website of Real Estate Regulatory Authority, the basic details of the project, approvals received for it, the sanctioned building plan, the carpet area of the apartments and details of the project launched in the last five year, submitted at the time of registration. This will boostthe confidence of NRIs and PIOs to invest in the real estate sector of India.
Solicitor Sudhir Mishra
Founder & Managing Partner
Trust Legal, Advocates & Consultants