The Union Government notified the rules under Real Estate (Regulation and Development) Act 2016 on October 31 for five Union Territories that do not have legislatures. The rules now apply retrospectively and cover even the ongoing projects. The Urban Development Ministry had placed the RERA in public domain since May 2016, eliciting public opinion. Several organisations had pointed out that ongoing projects had not been covered under the Act passed in March 2016. They had pointed out that lakhs of home-buyers were suffering due to project delays and non-compliance with delivery schedule across the country.
Sigh of relief
The rules uploaded barely minutes before the October 31 deadline was to expire, cover the ongoing projects too and have come as a big relief to those who have invested their hard-earned money in projects and plots in the last few years. Though these rules apply only with regard to Chandigarh, Dadra and Nagar Haveli, Daman & Diu, Andaman & Nicobar Islands, and Lakshadweep islands, they are likely to serve as a template for several States which have not drafted the rules yet.
The Union Rules specify that developers and builders of ongoing projects which are still without Completion Certificate, will also have to deposit 70% of the funds collected but which have remained unused, into a separate bank accounts within three months of applying for registration. It also requires them to specify the scheduled completion date while registering the project with the Regulator.
Case disposal in 60 days
For developers who have not complied with agreed delivery schedule, the Rules specify that they will have to pay compensation to buyers with an interest rate of State Bank of India plus two per cent. This implies that the delays will fetch the home-buyers 11 to 12% interest on the sums paid.
The penalty will be compounded with punishment of imprisonment for violation of the order of the Real Estate Appellate Tribunal against payment of 10% of the project cost in case of developers and 10% of the cost of property purchased in case of allottees and agents. The Rules bind the Appellate Tribunal to dispose of the cases within 60 days of being filed.
Ongoing projects
For ongoing projects that have not received Completion Certificate (CC), developers will have to make public the original sanctioned plans with specifications and changes made later, total amount collected from allottees, money used, original timeline for completion and the time period within which the developer undertakes to complete the project.
The promoter will also be required to declare the size of the apartment based on carpet area even if it was sold earlier on any other basis.
However, developers may find relief in withdrawal of the requirement of disclosing Income Tax returns in the final rules, a departure from the draft rules. This has been done in deference to the wish for maintaining confidentiality attached with it.
Satisfied
Abhay Upadhyay, national convener for ‘Fight for RERA’, has welcomed the new rules and said almost all concerns of the buyers in ongoing projects have been addressed. He says the provision of depositing 70% of the unutilised money in a separate bank account has the potential of restarting hundreds of stalled projects across urban centres.
