What is Land cost and Construction cost in RERA ?

What is Land cost and Construction cost in RERA ?
  • General
  • Monday 11th March 2019
  • Author: Riya Kapoor

Highlights

  • The certificate in Form 3 is required to be obtained along with Architect’s certificate and Engineer’s certificate as and when promoter wishes to withdraw fund from the separate account.

  • While issuing a certificate in Form 3, the CA has to verify the cost incurred towards construction cost and land cost.

  • The CA is also required to certify the proportion of cost incurred to total estimated cost.

As per the provisions of Real Estate ( Regulation and Development) Act 2016, CA is certificate is required for the purpose of withdrawal of money from designated bank account. While issuing a certificate in Form 3, the CA has to verify the cost incurred towards construction cost and land cost. The CA is also required to certify the proportion of cost incurred to total estimated cost. The certificate in Form 3 is required to be obtained along with Architect’s certificate and Engineer’s certificate as and when promoter wishes to withdraw fund from the separate account.
 
Land cost and construction cost have been put in words for easy calculation.
 
(a) “Land cost” shall include: 
 
(i) The costs incurred by the Promoter for the acquisition of ownership and title of the land parcels proposed for the real estate project, including its lease charges, Interest Costs, which shall also include overhead cost, marketing and/or brokerage costs, legal cost and supervision cost. 
 
(ii) Any security deposits, payments payable to landowner(s) in connection with the Joint development agreement
 
(iii) Amount paid for acquisition of Transferable Development Rights in accordance with applicable laws.
 
(iv) Consideration payable to the outgoing developer to relinquish ownership and title rights over the land parcel forming part of the real estate project.
 
(v) Amounts payable to State Government or Competent Authority or any other Statutory Authority of the State or Central Government, towards Stamp Duty, Transfer charges, Registration fees, land/zone change conversion charges, any taxes in relation to the land etc. 
 
(b) “Cost of construction” shall include: 
 
(i) The cost of construction for the purpose of sub-clause (D) of clause (I) of sub-section (2) of section 4, shall include all such costs, incurred by the Promoter, towards the on-site and off-site expenditure for the development of the Real Estate project such as mobilization advances to contractors, procurement advances to vendors, construction equipment, site preparations and so on and onsite and offsite construction activities, payments/ instalments to local authority, and all other items of expenditure for the construction, marketing and sale of the project
 
(ii) Fees, Charges, Interest etc. and taxes and penalties to any competent authority or statutory or local authority of the Central or State Government under any laws or rules or regulations for the time being in force
 
(iii) Principal sums and Interest paid or payable to any financial institutions including scheduled banks or non-banking financial companies etc. or any lender for the Real Estate Project. 
 
 
For any Queries regarding FORM 3, you can contact us.
 

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