Real estate developers will have to furnish additional information regarding the ongoing projects for the benefit of the buyers besides depositing 70% of the unused funds in a separate bank account to ensure their completion. This has been stipulated in the Real Estate (Regulation and Development) (General) Rules, 2016 notified today by the Ministry of Housing & Urban Population and applicable to the five Union Territories without Legislature viz., Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh. These Rules were required to be notified on October 31, as stipulated in the Real Estate (Regulation & Development) Act, 2016 that was partly brought into effect on May 1st this year.
Some changes have been made in the Draft Rules placed in public domain three months back, by incorporating some suggestions received from consumer associations and real estate bodies.
Regarding ongoing projects:
In respect of the ongoing projects that have not received completion certificate in specified time, 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, duly certified by an Engineer/Architect/practicing Chartered Accountant. Promoter shall also declare size of the apartment based on carpet area even if it was earlier sold on any other basis.
The developer, within three months of applying for registration of a project with the Real Estate Regulatory Authority shall deposit in a separate bank account , 70% of the amount collected and unused for ensuring completion of ongoing projects.
Registration of projects:
For registration of projects with the authorities, developers will be required to submit authenticated copy of PAN Card, annual report comprising audited profit and loss account, balance sheet, cash flow statement and auditors report of the promoter for the immediate three preceding years, authenticated copy of legal title deed, copy of collaboration agreement if the promoter is not the owner of the plot. Promoter also has to declare information regarding the number of open and closed parking areas in the project.
Promoter shall upload on the webpage of the project, within 15 days of expiry of each quarter information regarding number and type of apartments or plots, garages booked, status of the project with photographs floor-wise, status of construction of internal infrastructure and common areas with photos, status of approvals received and expected date of receipt, modifications in sanctioned plans and specifications approved by the competent authority.
The requirement of disclosing Income Tax returns proposed earlier has been withdrawn in the final Rules keeping in view the confidentiality attached with them and as pointed out by legal experts and promoters.
To incentivize registration of projects and Real Estate Agents with Regulatory Authorities, fee for the same has been reduced by half based on suggestions from promoters for reduction of fee. For registration of projects, the fee has been reduced to Rs.5 per sq.mt for up to 1,000 sq.mt area and Rs.10 per sq.mt beyond this limit subject to a maximum of Rs.5.00 lakh per project. For commercial and mixed development projects, it will be Rs.10 and Rs.15 per sq.mt subject to a maximum of Rs.7.00 lakh. For commercial projects, it will be Rs.20 and Rs.25 subject to a cap of Rs.10 lakh per project. For plotted development, it is Rs.5 per sq.mt with a ceiling of Rs.2.00 lakhs.
A cap has been placed on the total amount of registration fee based on the suggestion of real estate bodies.
Fee for renewing registration of projects with the Regulatory Authorities would be half of the registration fees.
For registration of Real Estate Agents, fee now prescribed is Rs.10,000 for individuals and Rs.50,000 for other entities as against Rs.25,000 and Rs.2,50,000 proposed in the Draft Rules.
Similarly, fee for renewal of registration of projects and agents has also been reduced to Rs.5,000 and Rs.25,000 respectively.
Interest to be paid in case of delay;
Developers 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 2%.
Further to an assurance given by the Minister of Housing & Urban Poverty Alleviation to the Parliament during passage of the Real Estate Act, Rules stipulate such payment to the allottee be made within 45 days of it becoming due. This interest applies to payments due to the developers by the allottee which is to be paid within the period to be specified in the Agreement of Sale.
Fee for appeals and complaints:
For every appeal to be made to the Real Estate Appellate Tribunal, fee proposed is Rs.5,000. For every complaint to be made to Regulatory Authorities and Adjudicating Officers, fee proposed is Rs.1,000.
Compounding of punishment:
Rules provide for compounding of punishment with imprisonment for violation of the orders of Real Estate Appellate Tribunal against payment of 10% of project cost in case of developers and 10% of the cost of property purchased in case of allottees and agents. Compliance with reasons for punishment shall be complied within 30 days of compounding.
In pursuance of the assurance given by Shri M.Venkaiah Naidu, Real Estate Rules prohibit any discrimination in sale of properties on any ground.
Under the Rules, Adjudicating Officers, Real Estate Authorities and Appellate Tribunals shall dispose of complaints within 60 days.
To enable informed decisions by buyers, Real Estate Regulatory Authorities shall ensure publication on their websites information relating to profile and track record of promoters, details of litigations, advertisement and prospectus issued about the project, details of apartments, plots and garages, registered agents and consultants, development plan, financial details of the promoters, status of approvals and projects etc.
Ministry of Urban Development is working on similar Rules which would be applicable for real estate sector in the National Capital Region of Delhi while the State Governments and other UTs with Legislatures are required to notify Rules for application in respective domains.
As per the Act, the Real Estate Rules were required to be notified by all the concerned by October 31,2016. In view of the delay in this regard, the Ministry of HUPA has sought time from the Committee on Subordinate Legislature of Rajya Sabha for notifying the Rules.
With notification of Real Estate Rules by the Ministry of Housing & Urban Poverty Alleviation, States and UTs are expected to do so soon. As per the provisions of the Real Estate (Regulation and Development) Act, 2016, Real Estate Regulatory Authorities are required to be put in place by April 30, 2017 before full Act is brought into effect, the next day.