The much-awaited Real Estate Act is coming to force sooner and it brings the promise of protecting the rights of the consumers while leading in transparency.
The Real Estate Act coming into force after a nine-year wait and marks the beginning of a new era
Only 13 states are able to notify the rules. The included states are Odisha, Gujarat, Uttar Pradesh, Madhya Pradesh, Bihar and Maharashtra.
The much-awaited Real Estate Act is coming to force sooner and it brings the promise of protecting the rights of the consumers while leading in transparency. However, only 13 states and Union Territories have been notified of such rules.
The government explains the implementation of this customer-centric Act as the start of an era where the consumer will be the King. In fact, the real estate players are also gearing to welcome this Act’s implementation. They believe that this change will bring functionality to the real estate sector.
The government has tried to bring the legislation in order to protect the home buyers while encouraging the authentic private players. The Real Estate (Regulation and Development) Bill, 2016 that was passed last year in March came into effect from May 1.
"The Real Estate Act coming into force after a nine-year wait and marks the beginning of a new era," Housing and Urban Poverty Alleviation Minister M Venkaiah Naidu said.
He further added that the law is slated to turn the “Buyer as the King” whereas the developers also get the benefits of the increased confidence of the customers within the regulated environment.
"The Act ushers in the much-desired accountability, transparency and efficiency in the sector, defining the rights and obligations of both the buyers and developers," Naidu said.
The developers now need to get the ongoing projects, the ones that do not have received the completion certification as well as the new projects with the concerned regulatory authorities within 3 months. Under the rules and regulations, it is necessary for the states as well as UTs to set up their own authority.
However, till now, only 13 states are able to notify the rules. The included states are Odisha, Gujarat, Uttar Pradesh, Madhya Pradesh, Bihar and Maharashtra. The housing ministry, last year, had notified the rules for these 5 Union Territories: Dadra and Nagar Haveli, Chandigarh, Andaman and Nicobar Islands, Lakshadweep, Daman and Diu whereas the Urban Development Ministry had set the same rules for the NCR of Delhi.
The other states and the Union Territories need to come out with their own rules. A spokesperson from HUPA Ministry has said that he has been taking up the matter with all UTs and states to implement the Act, requesting the authorities to ensure the actions as per the provision of the act within the desired time limit.
The ministry earlier had formulated and circulated the model rules for the UTs and states to its adoption and it is, therefore, their responsibility to notify the rules. The states that do not comply with the rules will not only face public pressure but the customer or the people can approach the court in this matter, says the spokesperson.
On the reports discussing the key provisions, the spokesperson says that some states have diluted them and those states have already been pointed and they have assured to ministry that such dilutions will be rectified.
Those states which have not notified the rules will face public pressure and even people could approach the court in the matter, he added. Currently, the Indian real estate sector involves around 76000 companies from all around the world. Some of the major provisions of this act, apart from this mandatory registration of real estate agents and project, it also includes deposition of the 70% of the funds that are collected from buyers to be submitted in a separate bank account to construct and complete the project.
It will ensure the time to time completion of the projects and the funds will be withdrawn only for the construction purpose. The law also orders penalties on the developers who will delay the projects. All developers, therefore, are required to disclose off the details of the projects on the website of the regulator and provide updates on the progress of construction quarterly.
In the case of project delays, which are due to the payment of monthly interest rates for bank loans for underfloor dwellings are based on developers as opposed to earlier, when the burden fell on house buyers, said real estate service provider JLL India CEO and Country Head Ramesh Nair.
RERA also notes that any structural or workmanship deficiencies addressed within a period of five years from the date of transfer of ownership to a promoter must be remedied by the organizer without further charges within 30 days.
If the organizer fails to do so, the aggrieved person is entitled to receive compensation according to RERA, Nair said.
Another highlight of the law is the imprisonment of up to three years for developers and up to a year in the case of agents and buyers for the violation of orders or regulatory authorities and appellate tribunals.
As per industry data, real estate projects in the range of 2,349 to 4,488 were launched every year between 2011 and 2015, amounting to a total of 17,526 projects with investments of Rs 13.70 lakh crore in 27 cities, including 15 state capitals.
About ten Lakh buyers invest each year with the dream of owning a house.
Real estate industry committees CREDAI and NAREDCO said the implementation of this bill will bring a paradigm change in the way Indian real estate functions. They expect property demand to increase, but the supply may be affected in the short term.
"It will bring a paradigm shift in the real estate sector. It will protect the buyers who have bought apartments in the past. The regulator under the RERA should find ways to help current projects and provide relief to homebuyers," NAREDCO Chairman Rajeev Talwar said.
CREDAI President Jaxay Shah said that RERA will increase transparency in the industry and strengthen the confidence of both domestic and foreign investors.
He said, however, that there will be a "teething problem" in the implementation of this law. Asked about the impact on prices, Shah said: "Supply will enter this year, but demand will improve as buyers have increased confidence in investment in the real estate market"
Real estate prices remain stable, but rates could rise 10 percent over the next six months, he added.
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