Real estate developers would soon have to divulge details of all projects, litigations, track record of promoters and declare there would be no discrimination against any allottee.
The ministry of housing and poverty alleviation has formulated draft rules under Real Estate (Development and Regulation) Act 2016, The Real Estate (Regulation and Development) Act 2016, which paves the way for setting up a regulatory authority and tribunal to regulate all transactions between buyers and sellers.
The rules provide for payments to be made for registration of projects and real estate agents with the regulatory authority, documents and information to be furnished by developers, procedures to be followed for registration, extension and renewal of registration, procedures for filing and hearing of complaints and appeals, appointment and service conditions of the chairpersons and members of Real Estate Regulatory Authorities and appellate tribunals and their powers.
The rules clearly state that a promoter would have to sign an undertaking saying there would be no discrimination against anyone in the allotment of any apartment, plot or building on any ground.
Rules require the Real Estate Regulatory Authority to be set up to ensure availability of information in respect of 60 aspects relating to the promoters and the projects. These include profile of developer of group, track record of promoter, details of past or ongoing litigations relating to real estate projects and apartment and garage related details.
The policies under RERA (Real Estate Regulatory and Authority) are made very intelligently from the policy makers of this country. Its new clause that every real estate project must have its own account and that account should have at least 50% funds from the buyers, has a potential to end the miseries faced by many home seekers. The promoter has to make a separate account on the project’s name with all the finances of that project done on that account. The 50% mandating on the accounts is very important considering that many problems in India’s real estate have to do regarding the usage of money.
The problems that buyers have that is, they get delayed possession of their homes as a builder often says that he has no funds to complete the project. One might be quite surprised to hear a builder say such thing when he gets the payment of the house within a couple of months of the booking. Sadly, this has become a norm. The actual picture says that these promoters take this money to start a new project somewhere else, and hence, start a vicious circle of eating the money of innocent home seekers. The Real Estate Regulatory Act of 2016 will ensure that a project must keep 50% of its acquired money from buyers in the account. All the transactions will only be done after the chief engineer, architect and chartered accountant certifies the use of money in that particular project or for the withdrawal by a promoter. Thus, buyers are quite assured as chances of delayed possession get diminished and other frauds related to real estate will also get lessened.
However, this will also be advantageous to those builders who seek to work with the norms set by the government. Keeping 50% of acquired funds will be helpful for them as they will have a fixed capital in case they lose money in their other business ventures. It will work in their favour too as they will now get the confidence to expand their business within the confines of laws and not worry about getting scrutinized by the people.
Real Estate Regulatory and Authority (RERA) has brought laws which can organise the real estate sector of India. The policy makers have carefully read the grievances of buyers, promoters, agents and have made laws according to that. One field where buyers often get cheated is or a builder misuses government policies’ loopholes is the undefined land. There are a lot of cases where misconduct has happened regarding the positioning of the land. The casual markings of land have led to unlimited problems. The solution to this problem is very basic and affective as RERA has now made it mandatory to write the latitudes and the longitudes in an agreement.
Marking coordinatesin the agreements is a rock-solid way to stop the nuisances regarding this sector of real estate. The establishment of RERA in all the states will be done in a year. The time taken is to make the property business transparent in all levels. The plot deals in villages especially see a lot of problems and this law will help them. The bigger picture of setting latitudes and longitudes in each real estate agreement is that one day the government wants to ensure that every piece of land gets its own set of coordinates. The official website of RERA will contain the information on coordinates so that people can verify by just putting the numbers. The problem of selling a plot multiple times by casual agents will also see a rapid death.
RERA Consultants, who work to bring a common ground for the government, promoters, agents and buyers is making its best effort to give real estate sector its true worth to India. We highlight major laws in RERA so that the people can be made aware of their rights and also, if they feel they need additional help, they can contact us.
When buying a house, every buyer takes care of the area for which he pays. Generally, many promoters give information on the built up area rather than the carpet area. This makes it easy for them to advertise their flat as a buyer thinks that he is paying less for more area. But, the reality is quite different. The carpet area is usually less than the built up area. RERA has given new provisions for a promoter on how he should make people aware of the carpet area.
For that, we first have to know what the difference is among a carpet area, built-up area and super built area. Simply put, the carpet area is that area where we can spread a carpet or it is nothing but the net usable area. Built up area is carpet area plus the additional areas sanctioned by the authority such as the area of inner and outer walls, dry balcony area etc. Super build area is carpet area plus built up area and in addition to this, it also includes the proportionate area of the stairs, lobbies and galleries which can be used by the entire building.
Now, the issue which arises in RERA is that its guidelines aptly says that a buyer must disclose the entire carpet area so that a customer knows exactly what he is paying for. But, RERA does not specify if a developer has to compulsorily sell a flat on carpet area. However, disclosing carpet area will create buyers’ awareness as many times it has happened that a buyer thinks that he is getting more area because the promoter or the agent advertises the flat on the built up area. Many developers think that they should charge buyers on the carpet area, but they have to change according to the market as majority of the developers sell it on built and the proportionate super built up area. RERA Consultants follows all the latest news regarding RERA so that a buyer, real estate agent and a promoter don’t find any difficulty in doing work with proper coordination. People are hoping that RERA passes an amendment which is fair for both the buyer and the promoter. For example, RERA can make a change in built up area pricing and can put guidelines where a promoter should sell on carpet area plus the proportionate super built up area. We are hoping that the policy makers of India do bring in some minor detailed changes which are fair to everyone.
MOFA (Maharashtra Ownership Flats Act), is one of the oldest housing Act. It came into the being in the year 1963 to regulate promotion, construction, management and transfer of flats sold on an ownership basis within Maharashtra. It laid down the responsibilities of developers and the rights of flat purchasers.
In 2011, when government came up with new Maharashtra housing bill, it received huge criticism. The Members of Maharashtra Welfare Association even filed an appeal that MOFA should be retained as it has been in force for 60 years and is more consumer friendly than the new bill.
Now with the coming of RERA India, will MOFA be repealed or not is a growing concern among state people. Vinod Rohira, a developer suggests that MOFA should retain until the time there is deemed conveyance. He believes National RERA seems to be ideal and State RERA is expected to follow it which will impose certain leverages. MOFA eases down the registration process even in the absence of builder, therefore RERA and MOFA should co-exist.
RERA India is a step to create better transparency in the realty sector. RERA is expected to be for the benefit of the homebuyers. The RERA India 2016 bill has been passed and national RERA seems to be an ideal solution to fill the gaps between developers and purchasers. RERA consultants will play a huge role as they will help in combating the grievances of buyers and dealers.
RERA India is currently a buzzword in the real estate market. Rules on setting aside 70% of customer advances in an escrow account was reduced to 50% in the RERA bill 2016. Maharashtra housing regulator will soon be out. But the government now wants the escrow to be increased to 70%. This has invited much debate from developers who slammed government’s proposal.
It means that all the money a developer raises from the sale of the project has to go under escrow account and that money can be used only for the construction of the said project. From a home buyer point of view, all the money that was paid by you for a particular project which was used by developers for other purposes like paying salaries or debt, purchasing other land would now be stopped. But the proposal might increase the pressure on builders and this might lead to increase in the price of homes.
Developers in Maharashtra pointed out, it has to be purposeful and achievable, otherwise wrong means might be practiced to withdraw cash.
They should keep some control but 70% is far too high. It is not possible to buy a land, put the money in escrow and pay interests on it. It will on lock the cash and make builders more leveraged.
Prioritization of completion of project should be implemented to protect the interest of buyers. Builders must be serious and complete projects on time. What now needs to be seen will Maharashtra’s government proposal to raise escrow for better transparency will be implemented by RERA or not.