The much-awaited Real Estate Regulatory Act, which promises to protect the rights of homebuyers and bring in transparency to the sector, comes into force on Monday. Though only 13 States and Union Territories have notified the rules so far, the Centre believes that within the next two months, others too will follow suit.
“All Sections of the Act will come into force from May 1 and become operational. The clock now begins to tick for registration of ongoing and new housing projects with regulatory authorities within three months,” said a senior official of the Ministry of Housing and Urban Poverty Alleviation, who did not wish to be named.
Real estate developers shall get all the ongoing projects that have not received completion certificate and the new projects registered with regulatory authorities by July-end. This enables the buyers to enforce their rights and seek redress of grievances, a Ministry spokesperson said.
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Under these regulations, developers are required to display sanctioned plans and layout plans of at least 3X2 feet size at all marketing offices, other offices where properties are sold, all branch offices and head office of the promoters in addition to the site of project.
Fund management
As per the new act, 70% of the funds collected from buyers would have to be deposited in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects. Projects with plot size of minimum 500 sq.m or at least eight apartments shall be registered with regulatory authorities. Both developers and buyers to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays.
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The Act also puts the liability of developers for structural defects for five years.
At the time of passing of the Bill in Rajya Sabha in March last year, 76,044 companies were operating in the real estate sector, including 17,431 in Delhi, 17,010 in West Bengal, 11,160 in Maharashtra, 7,136 in Uttar Pradesh, 3,054 in Rajasthan, 3,004 in Tamil Nadu, 2,261 in Karnataka, 2,211 in Telangana, 2,121 in Haryana, 1,956 in Madhya Pradesh, 1,270 in Kerala, 1,202 in Punjab and I,006 in Odisha.
At present, Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Maharasthra, Madhya
Pradesh and Bihar have notified the rules. The Housing Ministry had last year notified the rules for five Union Territories —Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep, while the Urban Development Ministry came out with such rules for the National Capital Region of Delhi.
A Ministry official said that other States had already prepared draft rules or were at an advanced stage of preparing them and in the next two months, all States should have the rules in place.