New Real Estate Act to ensure transparency, timely completion of projects

The centre has notified the rules of the Real Estate Act that seeks to regulate the housing sector besides bringing transparency and ensuring timely completion of projects, which will be applicable for five union territories.

The rules notified by the ministry of housing and urban development, will be applicable to the union territories of Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep, an official release said.

The ministry will come out with such rules for the National Capital Region of Delhi while the other states and UTs will come out with their own rules.

The Real Estate (Regulation & Development) Act, which seeks to regulate the vast real estate sector, requires registration of all projects with state-level Real Estate Regulatory Authorities to ensure protection of the interests of both buyers and builders.

To incentivise registration of projects and real estate agents with the regulatory authorities, fees for registration have been reduced by half, the release said.

The fees for registration of projects has been reduced to Rs5 per square metre for up to 1,000 square metre and Rs10 per square metre beyond this limit, subject to a maximum of Rs5 lakh per project.

However, for commercial and mixed development projects, it will be Rs10 and Rs15 per square metre subject to a maximum of Rs7 lakh.

For commercial projects, the fees will be Rs20 and Rs25 per square metre subject to a cap of Rs10 lakh per project. For plotted development, it is Rs5 per square metre with a ceiling of Rs2 lakh.

The fee for renewing registration of projects with the regulatory authorities will be half of the registration fee, the release said.

For registration of real estate agents, the fees now prescribed are Rs10,000 for individuals and Rs50,000 for other entities, as against Rs25,000 and Rs2,50,000 proposed in the draft rules, it said.

Similarly, the fees for renewal of registration of projects and agents have also been reduced to Rs5,000 and Rs25,000, respectively.

The Real Estate Act rules require builders to deposit 70 per cent of unused amount collected for ongoing projects in a separate bank account to ensure timely completion of the projects.
 
In case of project delays, the rules state that a developer will be required to refund or pay compensation to the allottees with an interest rate of SBI's highest Marginal Cost of Lending Rate plus two per cent.

Also, such payments to the allottees have to be made within 45 days of becoming due.

For every complaint made to regulatory authorities and adjudicating officers, the proposed fee is Rs1,000 while for every appeal to be made to the Real Estate Appellate Tribunal, the proposed fee is Rs5,000, the release said.

As per the rules, adjudicating officers, real estate authorities and appellate tribunals will have to dispose of complaints within 60 days.

The rules also provide for compounding of punishment with imprisonment for violation of the orders of Real Estate Appellate Tribunal against payment of 10 per cent of project cost in case of developers and 10 per cent of the cost of property purchased in case of allottees and agents, the release said.

Compliance with reasons for punishment will have to be complied within 30 days of compounding, it said.

In case of the ongoing projects, 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 it.

The requirement of disclosing income tax returns, proposed earlier, by a promoter has been withdrawn in the final rules keeping in view the confidentiality attached with them and as pointed out by legal experts and promoters, the release said.

As per a notification issued in April this year, the Real Estate Rules were to be notified by 31 October this year or within six months of the Act coming into force. The ministry's April notification brought into effect 69 of the 82 sections of the Act from 1 May this year.

With notification of Real Estate Rules by the ministry of housing and urban poverty alleviation, states and union territories are also expected to do so soon.

As per the provisions of the Act, real estate regulatory authorities are required to be put in place by 30 April next year before the full Act is brought into effect the next day.

The Real Estate (Regulation and Development) Bill, 2016 was passed by the Rajya Sabha on 10 March and by the Lok Sabha on 15 March this year.