Karnataka has become the first State to draft rules under the Real Estate Regulation Act (RERA) 2016 passed by Parliament. The rules were uploaded on the Karnataka Housing Department website on October 26, five days before the deadline. The only other State which has so far framed the rules is Gujarat which notified them on October 31.
Hailed by most home-buyers, the Karnataka draft rules are stated to be a positive step towards protecting the interests of customers who were at the mercy of developers and promoters of housing projects till now. According to the notification, all real estate agents would require to register themselves as individuals or firms with the Real Estate Regulatory Authority, to be set up by the Karnataka Government, by filling Form-D.
Registration
It requires them to provide details of their enterprise, photos of the individual or directors or partners, memorandum of association, address proof of the place of business, Income Tax returns, PAN card details, etc. Fee for individual agents has been fixed at Rs. 50,000 and for firms, Rs. 5 lakh.
Registration will be valid for five years and will be renewed three months prior to expiry. Renewal fee is Rs. 20,000 for individuals and Rs. 2 lakh for firms in the Bengaluru urban area.
Developers and builders are required to upload on their website authenticated copies of the approvals, commencement certificate, sanctioned plan, layout plan and specification of the project or the phase thereof, details of the number, type and carpet area of the apartment for sale in the project, details of the number and area of garage, number of open parking areas available in the projects, registered agents, consultants, location, boundaries including latitude and longitude, development works to be executed in the proposed project and proposed facilities to be provided including fire-fighting and drinking water facilities, emergency evacuation services, use of renewable energy, etc.
The promoter will have to regularly update info on status of construction of each building with photos, and status of construction of each floor and internal infrastructure with photos. He will also have to upload approvals received, applied and expected date of receipt, modifications, amendment or revisions, if any, issued by the competent authority with regard to any licence.
Major advance
Shrinivas Rao, CEO-Asia Pacific, Vestian Global, a major real estate consultant, terms the draft rules a major advance on the legal firmament for home buyers. He said though initially these rules might be painful for developers, the sector will develop transparency and builders will not be able to divert money to other projects, leaving customers of ongoing projects in the lurch.
Customers will be protected as builders will have to refund the money with 10% interest on the estimated cost of the project within 60 days in case of defaulting on delivery schedules. Provision of depositing 70% of the money in an escrow account further enhances the safeguards for buyers.
Laudable
A laudable feature of the draft rules for Karnataka is the coverage of ongoing projects. According to M.S. Shankar (who has mobilised hundreds of home buyers in Bengaluru), convener of the Home Buyers Association of Karnataka, though the Union government has addressed the lacuna of not covering existing projects through a new gazette notification (issued on October 31), the Karnataka draft rules have taken care to include them at the draft stage itself. Mr. Shankar has collected data of 142 existing projects in Bengaluru, of which 84 are ongoing projects (which were started before RERA came into force) with 29,000 buyers. The number of buyers ranges from 100 to 1,200 in each project.
A boon
Mortgage banker R.P. Shankar describes the draft rules as a boon for both builders and consumer. He says it is surprising that such a vast sector of the economy was unregulated and was run in a very haphazard manner for 60 to 70 years after Independence.
According to him the developers and builders will have to upload the balance sheets of ongoing projects for the last three years and deposit 70% of the yet-to-be-made payments into an escrow account and stick to the delivery schedule.
The draft rules can be accessed at: http://164.100.133.123/
The author can be accessed at maqsiraj@gmail.com
