Timely completion of projects and delivery, safety for the investment as 70% of the amount paid should be kept in escrow account and maintenance of quality assured due to defect liability for five year period are going to be some of the benefits for the customer if the Telangana State Government enacts the Real Estate (Regulation and Development) Act as mandated by the Centre.
There was not only an in-built dispute resolution mechanism in the Act but specifying the sale on carpet area would help transparency in dealings, observed B. Purushothama Reddy, former Director of Town & Country Planning (DTCP).
Better performance
For the promoters of real estate projects, it could lead to better organisation and professionalism of the sector, greater visibility into the developers’ performances could help in time bound completion of projects besides attracting high investments.
Mr. Reddy, who had helped the neighbouring State prepare the Andhra Pradesh Real Estate (Regulation and Development) Rules, 2017 (notified last month), also pointed out a few distinct “disadvantages” to the developers.
These are because of an additional layer of approvals introduced, maintenance of 70 per cent of the receipts which could limit the progress of the project and penalties for non-registration of a project are quite high.
Penal fees range from a 5% to 10% of the project cost or one to three years of rigorous imprisonment for any infringement of orders issued by the regulatory or appellate authorities by promoter, agent or allottee.
Varied interpretations
There was also varied interpretations of what constitutes an “ongoing project” for registration.
For instance, Andhra Pradesh government had stated it to be a project where completion certificate was not issued but it excludes projects where roads, open spaces, amenities and services have been handed over to the local authority in layouts.
Slabs are laid in housing projects, developmental works completed and sale/lease deeds of 50% of the apartments or plots have been executed were also excluded.
Even projects where development works have been completed and application was filed with the competent authority for issue of Completion or Occupancy Certificate too cannot register afresh in the new body.
Problem area
Mr. Purushothama Reddy, also a former Chief City Planner for GHMC, pointed out that post construction maintenance as insisted in the Act would be another problem area as there was no clear meaning of what constitutes ‘structural defects’.
While there is no provision to insure the land title, the most interesting part is that there is no mechanism to offset the delay in obtaining approvals from the Governmental agencies!
