Almost 13 months after the Real Estate (Regulation and Development) Bill, 2016 was passed by Parliament in March 2016, the much-awaited Real Estate (Regulation and Development) Act (RERA) that aims to protect the consumer and bring transparency in the sector, will come into force on Monday. However, with only 13 states notifying the rules within the Act, it will take some time before it becomes a reality across the country.
On Sunday, Minister of Housing and Urban Poverty Alleviation, M Venkaiah Naidu said: “This is a landmark legislation becoming a reality nine years after regulation of real estate sector was first mooted in 2008”. Naidu pointed that the government took it seriously given the importance of the legislation and pressing need to protect the interests of large number of buyers across the country. He said that he has assured all concerned that, “the Bill only enables regulation of the sector for the benefit of all and not strangulation….. I only insist that the developers must fulfil their promises…simply adhere to the promises made in the advertisement.”
The states that have notified the rules are Uttar Pradesh, Bihar, Gujarat, Odisha, Andhra Pradesh, Maharashtra and Madhya Pradesh. While the housing ministry had last year notified the rules for five Union territories, the urban development ministry came out with such rules for the national capital region of Delhi. The other states and UTs will have to come out with their own rules. While 13 states have already notified, the minister said that others will also do so. “Given the implications for the large number of buyers and for the sector as such, I am confident that all states and UTs would do the needful to enable the buyers exercise their rights as required, failing which they will face adverse consequences from the public and the courts as well,” Naidu added.
Some of the key provisions of the bill include — 70 per cent of the money collected by the developers from buyers be deposited in a separate bank account to prevent diversion of funds to other projects; cover all projects with minimum plot size of 500 sq metres or eight apartments; developers will be required to refund payments to buyers within 45 days of becoming due and penalty on developers for delay of projects, among others.
Further, all ongoing projects that have not received completion certificate and new projects shall be registered by developers with real estate authorities within three months i.e by July end. This will ensure grievance redressal in case the builders fails to deliver on his promise said Naidu.
Industry insiders have welcomed the Act and say that while it will enhance the consumer confidence, that in turn will lead to revival of sentiment and demand for housing. “It will protect buyers who have purchased flats in the past. The regulator under the RERA should find ways to help complete ongoing projects and provide relief to home buyers,” said Rajeev Talwar, chairman NAREDCO.
CREDAI president Jaxay Shah said RERA will increase transparency in the sector and boost confidence of both domestic and foreign investors. “Supply will dip during this year but demand will improve as buyers will have increased confidence about investing in the property market,” said Shah.
Anshuman Magazine, chairman, India and South East Asia, CBRE, said: “In the long run, we feel that the establishment of a regulator will prove beneficial for the sector. With investor confidence returning to the sector, resulting in greater institutional capital inflows in the long term, we can expect to see the segment in revival mode.”