Realty business hails RERA
Despite the inordinate delay in notifying the Real Estate (Regulation and Development) Act (RERA) rules by the state government, buyers had high hopes from the government in respect of ongoing projects. However, they were left disappointed on Wednesday as cabinet said that the Act will not apply to projects that are 60 percent complete or where the sale deed has already been executed.
Experts fear many builders might manipulate this rule and home buyers will have to bear the burnt once again.
M S Shankar, convener of Fight for RERA-Karnataka chapter, said, “We are very disappointed with the development. The 60 percent completion exemption can be manipulated by builders in various ways. This means most of the ongoing projects will not be covered under the Act and the majority of the victims will not get any relief. The state government did not act in the right spirit.”
The real estate industry has welcomed the move. Farook Mahmood, Chairman & Managing Director, Silverline Group and world president-elect, FIABCI 2017-18, says, “It is a positive move. However, instead of 60 percent, Commencement Certificate would have been a better to consider as there cannot be any change after CC is given.”
CREDAI vice-president Suresh Hari said, “The exception for the ongoing project was a necessity so that the Act could be implemented in a practical manner. Though it’s a welcome step to exempt ongoing projects on a percentage basis, it will take some more time before full implementation.”
“From the industry point of view, it’s very safe for us because the main work starts after 60 per cent of work is finished. We have to work on the detailed finishing like the compound, club house, CA land, amenities, safety, security, etc. Basically, it is helpful to the builder and not the buyer,” added Suna Miandad, MD of Honey Properties.
Notification will have more clarity: Minister
On the modalities to declare that a project is 60 percent complete and the competent authority to do so for it to be exempt from the Real Estate (Regulation and Development) Act, 2016 (RERA), Law and Parliamentary Affairs Minister T B Jayachandra just said, “The notification of the rules, which will be issued in the next few days, will have all the details to ensure complete clarity on all aspects.”
Developers will have to register under-construction projects with RERA in 3 months of implementation of the Act. They will have to place 70 percent of the money collected from buyers in an escrow account.
Registration will be mandatory for all commercial and residential real estate projects where the land is over 500sqmt or includes eight apartments.
Each phase will be a stand-alone real estate project and the promoter will have to obtain the registration certificate for each phase.
Penal action proposed
If promoter does not register a project with the regulatory authority, the penalty may be up to 10 percent of the estimated project cost as determined by the Regulatory Authority
If promoter does not comply with the aforesaid order of the Regulatory Authority, imprisonment of up to three years and a further penalty of up to 10 percent of the estimated cost, or both;
In the promoter provides false info while making an application to Regulatory Authority or contravenes any other provision, the penalty may be up to 5% of estimated cost of project or construction.