RERA Turns 2

It’s been two years since the deployment of the Real Estate Regulatory Authority (RERA) across India and the Centre’s aim of enforcing it in each state is gathering visible momentum. Even the north-eastern states including Manipur, Meghalaya, Mizoram, Nagaland, and Sikkim – which earlier shied away from it – have agreed to officially notify RERA rules soon. West Bengal is the only state which notified its own real estate law under West Bengal Housing Industry Regulatory Authority (WBHIRA).

Rohit Poddar, Joint Secretary, NAREDCO West and Managing Director, Poddar Housing and Development Ltd. states, “RERA has been a huge success in Maharashtra, the trust gap between the developer and the seller has largely been bridged. RERA has been very quick to address the issues of the developers and giving judgments on the conflicts between the buyer and developers. Reconciliation process through arbitration cell has become faster and convenient for the customers in case of delay in possession, which has consolidated the confidence of the buyers in the market. MahaRERA is the best RERA in India.”

It may be recalled that RERA intended to cover developers as well as real estate agents seamlessly across the country. As it stands now, 22 states and 6 Union Territories have already notified their RERA rules, out of which 19 states have active online portals. West Bengal too has an active portal for its own real estate law.

Manju Yagnik, Vice Chairperson, Nahar Group & Vice President NAREDCO (MAHARASHTRA) – “One of the biggest and most important action in the industry was implementation of RERA. The challenge of bringing it in the ambit of regulation has been a journey that is still progressive in nature as many questions still do not have the answer. However the real estate machinery has changed with this development.”

Things are changing for the better. Generally, players are far more accountable and cannot easily get away with breaking the RERA rules.

“There are ample amount of reasons to celebrate the second year anniversary of the much needed RERA, the implementation of which was envisaged to bring in transparency in the industry, has definitely achieved what it was set out for. Developers today are committed more than ever on the delivery of the projects; it has also brought discipline in the usage of funds. All in all RERA has brought in some positive changes amongst the industry, along with increased accountability, transparency and efficiency.” Rahul Grover, President Sales and Operations at Sai Estate Consultants.

Amit Ruparel, Managing Director, Ruparel Realty on RERA completing 2 years, shares “The Real Estate Regulation & Development Act (RERA) is a landmark legislation poised to catapult the sector into its next phase of growth, laid on the foundation of being transparent, competitive, hassle-free and consumer-centric, which certainly benefits corporate developers like us and most importantly the home buyers.”

Source: www.realtyplusmag.com/rera-turns-two

RERA Act completing 2 years and its influence on the real estate industry

One of the biggest, and arguably the most called for, reforms in real estate industry in India was the implementation of RERA nearly 2 years ago. While the debate had been on for nearly a decade on regulating the highly opaque industry, the challenges of bringing it within the ambit of regulation were multi-fold. Let alone the reluctance on part of the key players, the overall machinery to manage the process was fraught with numerous challenges.

In the backdrop of a regime change at the centre in 2014, which placed its bets on ‘Housing for All’, among other things like urbanization-themed ‘Smart Cities Mission’, it became imperative for the industry to bring itself under the ambit of regulation. Moreover, it had long been understood that unless there was proper consumer protection and close monitoring of processes and practices, it was not possible for organised funding to take deeper positions in the industry.

Eventually, Real Estate (Regulation & Development) Act 2016 took shape paving the way for establishing regulators at the centre, and subsequently at all state levels. Undoubtedly, it is work-in-process, with the states currently placed across the spectrum of RERA implementation. On the one hand, Maharashtra and Madhya Pradesh have taken the lead and are markedly ahead, while Haryana and Bengal on the other, have still to catch up.

In the very brief history of RERA, it is worth taking a quick glimpse of what RERA has achieved by itself, and what its collateral impact has been.

A quick look at the rulings given by Maha RERA, arguably the most advanced state in implementing RERA, at the end of 2018, tells us that nearly 5,000 complaints were received and over 3,100 orders passed. Just till the end-2017, 79% rulings were in the favour of buyers. That should give us an estimate of the speed and the extent of buyer-protection that RERA offers. It is evident that as various states establish the authorities; and as these state authorities come to function at optimal efficiencies, real estate will be a radically transformed industry.

At the same time, it is imperative to check RERA’s collateral impact. We asses how prices – the best indication of the state of markets –behaved through implementation of RERA.

It is evident that while the prices had been in a steady decline between 2013 and 2016, the cycle turned negative in the period immediately following the implementation of RERA. Evidently, the sales dipped, and projects began to struggle to cope with the rigorous requirements of the now regulated industry. It is well-known that residential real estate creation was historically dependent on customer advances. As customers booked homes, the initial capital flowed in. Stage-wise payments from customers ensured that the construction process remained a customer-funded activity.

Often, in the absence of a transparent mechanism and due to lack of disclosure mechanisms, the payments thus received were deployed in other projects as well. One of the fundamental changes brought about by RERA was a halt to this practice of diversion of funds to other projects or land purchases. 75% of the funding received for a certain project, was to be deposited in escrow and full disclosures were required. This did create a grind for the developers, who could no more use customer advances for any activity other than what it was meant for.

It should be remembered that this period of negative growth in prices coincides with, and is closely linked to, some other remarkable events, namely, demonetisation, temporary ban on construction in Mumbai, implementation of GST, and a little later, the liquidity crisis of 2018. All of these, along with RERA, contributed to the slowdown in the industry, leading to falling sales every successive half-year as well as negative price growth. GST implementation, the other structural change apart from RERA, can be said to have contributed significantly to the ways of doing business in residential real estate.

The downward movement in prices has been increasingly arrested in 2018 and continues along the upward path. It can be understood that while the flurry of reforms and various policy measures sent successive shock-waves in the real estate industry, the eventual acceptance of the new reality is sinking in. The supply side has clearly begun learning the dynamics of this ‘changed’ environment, and has been redrawing its business models.

In the years pre-dating RERA, customer grievances were addressed in the courts, for which buyers were usually neither capable nor had the sustenance for long-drawn cases. RERA has definitely eased life for them. But, this is just one part of the benefit. People do not buy houses to fight cases. Homes are for living and usually bought once in a lifetime, with the savings of a lifetime. Such a purchase needs greater scrutiny as well as protection.

The greatest protection for demand side comes in the form of much higher transparency and an assurance on proper deployment of funds by builders. Similarly, alterations to promised layouts or designs are not possible anymore, at least under normal circumstances. RERA seeks to establish information symmetry, and as it is implemented across the country, we should have a market which is open to scrutiny and is transparent.

It has been vigorously argued on numerous platforms whether these changes, of which RERA happened to be the first link in the chain, have been worth the pain. However, it is evident that RERA is the need of the hour and is here to stay. The two years since it was born, have been turbulent, arguably making it look bigger than it is. There is little doubt, nonetheless, that it has altered an industry that was often opaque at best, or, notoriously oblivious to customer interests at worst.

Source: www.thepropertytimes.in/rera-act-completing-2-years-influence-real-estate-industry

Home buyers to pay in accordance with a project’s progress: MP-RERA

Bhopal

Government boards and authorities involved in housing projects cannot charge money from buyers in a fixed date linked schedule — a practice common in Madhya Pradesh till now. Boards and authorities will now charge money on the basis of the completion stages of a project or in construction-linked payment module.

After coming across several complaints related to housing projects by government organisations, the Real Estate Regulatory Authority (RERA) observed that the money charged by government agencies was not connected with the actual construction while, ideally, people should be asked to pay in accordance with the progress of a project, RERA observed.

RERA has requested the state government to correct its price charging structure after which the government recently issued circular to all boards and authorities to do the needful.

So far, irrespective of a project that has started or been completed, the government boards and authorities would charge money in a fixed slot of three-month, six-month and on yearly instalments. The buyers would be fined if they do not pay the instalment on the fixed date.

Government boards and corporations often roll out major real estate projects in a city. In Bhopal, the most prestigious housing projects are of the housing board and Bhopal Development Authority.

RERA chairman Antony de Sa said a government agency — be it a board or authority — can charge money in a dated schedule only if the project is complete. But if a project has been announced or is an on-going one, the money demanded from buyers has to be linked with construction, he added.

RERA has received around 40 complaints with regard to impractical payment structures by the government agencies. Housing projects by government agencies would also have to mention delivery date. It is not mentioned in the projects yet.

Similarly, the government agencies would also not be able to do cost escalation of land in a project on a yearly basis. It would be restricted only till the due date of project completion.

If a property was due for completion in the year 2015, the agencies, in case of delay, cannot charge yearly cost escalation on land, the officials added.

Source – www.realty.economictimes.indiatimes.com/news/industry/home-buyers-to-pay-in-accordance-with-a-projects-progress-mp-rera/68625447

MahaRERA releases SOP to remove delaying developers

Pune

The Maharashtra Real Estate Regulatory Authority (MahaRERA) on Thursday issued a standard operating procedure (SOP) to allow homebuyers to remove a developer in case the project was delayed. The project would then be handed over to an expert panel for completion.

The authority, however, clarified that it could initiate such action only against non-litigated projects.

“It will help complete all delayed projects in the state. This is an unique move, probably the first in the country, under the Real Estate Regulatory Act, 2016, which will help the association of allottees (homebuyers) take control of the situation,’’ Vasant Prabhu, MahaRERA secretary, told TOI.

In case of revocation orders, the developer will lose rights to the project and his bank accounts will stay frozen, the order said, adding that the authority would then set up a panel of experts to prepare a project report within four months to decide on future course of action.

The panel would prepare a blueprint for project completion. The blueprint would consist financial details and a detailed roadmap towards arranging the said finances.

The SOP has been issued under section 37 of the RERA Act, 2016, with reference to sections 7 and 8. MahaRERA officials said the authority will only consider complaints received from an association of allottees and not from single homebuyers for such action. “The complainants should not be less than 51% of the total allottees,” they said.

MahaRERA will serve a notice to the promoter with 30-day deadline to present his/her case.

Source – www.realty.economictimes.indiatimes.com/news/regulatory/maharera-releases-sop-to-remove-delaying-developers/68623712

Nila Mohanan holds interim Goa-RERA charge

Goa

With the transfer of bureaucrat Sudhir Mahajan to Andaman and Nicobar Islands, the post of the interim Real Estate Regulatory Authority has fallen vacant.

The government has issued an order stating the secretary of urban development will officiate as the regulatory authority, however, Goa lacks a full time urban development secretary, too.

IAS officer Nila Mohanan has been given charge as urban development secretary as an interim measure along with her full time assignments as secretary education and secretary revenue.

“Government of Goa hereby designates the secretary urban development as the regulatory authority for the purpose. This order shall come into force with immediate effect,” director and additional secretary for municipal administration R Menaka said in the official order.

Sources – www.realty.economictimes.indiatimes.com/news/regulatory/nila-mohanan-holds-interim-goa-rera-charge/68165153

Incomplete projects in Indore & Bhopal get MP-RERA breather

Indore

Over a dozen real estate projects led by Indore and Bhopal have sought extension from MP Real Estate Regulatory Authority (RERA) after they failed to complete project as per proposed deadline at the time of registration.

At the time of registration of project under RERA, promoters have to propose deadline for completing the project and if deadline is breached, promoter has to take extension from the authority or else the project will fall in illegal category.

RERA chairman Anthony De Sa said, “There are over a dozen projects that have asked for extension. Extensions are being granted so that they do not become illegal projects. In case of illegal the project will be of no use to the allottee and the builder.”

The authority is giving extensions after promoter pays a certain fee and project remains under regular monitoring. De sa said extensions are given with mandatory condition that it does not any way affect right of allotee and they get compensation for delay.

According to Rera, extensions can be given for a maximum one year in phased manner while under certain circumstances considering interest of allottees, extensions can be above a year.

Recently at a hearing in Indore, an Indore based commercial project costing around Rs 13 crore has been granted an extension of 3 months over an year.

Sources – www.realty.economictimes.indiatimes.com/news/industry/incomplete-projects-in-indore-bhopal-get-mp-rera-breather/68377731

MR Kamble appointed as Chairman of Karnataka RERA

Bengaluru

The Real Estate Regulatory Authority (RERA) of Karnataka has finally appointed M R Kamble, a retired IAS officer, as the chairman.

The authority that was notified on July 10, 2017 has seen four interim chiefs since inception.

Karnataka Real Estate Regulatory Authority constituted a 3-member team to appoint the chairman of the RERA authority apart from setting up a tribunal with a High Court judge as part of it. The housing department received nearly 60 applications for the top post.

The K-RERA has appointed the chairman and the prayers of home buyers have been listened. Hoping the RERA functions to bring desired relief to the homebuyers, ” said MS Shankar, secretary, Forum for People’s Collective Efforts.

However, the government is yet to notify model sales agreement as per central government rules and RERA appellate tribunal members. “The appellate tribunal appointment has been with held for now,” said Shankar.

“We had submitted request to the government to reconsider the transfer of RERA secretary K S Latha kumari for the smooth transition,” said Shankar.

The Karnataka government notified Karnataka Real Estate (Regulation and Development) Rules-2017 in the state gazette in July last year with the setting up of Karnataka RERA.

The law was passed by Parliament in March 2016 to address the woes of millions of homebuyers and to ensure better governance in a sector that was hitherto unregulated. According to the RERA registration, Maharashtra has the highest share of registered projects under RERA, followed by Uttar Pradesh, Gujarat, Karnataka and Madhya Pradesh.

Sources – www.realty.economictimes.indiatimes.com/news/regulatory/mr-kamble-appointed-as-chairman-of-karnataka-rera/68273238

RERA rules: 10 important facts to know

The government notified the final rules to implement the Real Estate (Regulation and Development) Act, 2016 (RERA) that aims to bring transparency and set accountability in the sector and help in completion of stalled projects. The rules will be applicable for five Union territories without legislature of Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh.

Here are the key points you should know about:

  1. Pay Compensation: Developers will now be required to refund or pay compensation to the allottees for delay in projects with an interest rate of the State Bank of India’s highest marginal cost of lending rate plus 2% within 45 days of it becoming due. This would come to around 11% to 12%.
  2. Deposit Money: For the completion of ongoing projects, developers will have to deposit 70% of the amount collected and unused within three months of applying for registration of a project with the Real Estate Regulatory Authority in a separate bank account.
  3. Punishment: The rules also contain clauses providing 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.
  4. Sale of Properties: Discrimination in sale of properties on any grounds will also not be entertained under the new rules. Adjudicating Officers, Real Estate Authorities and Appellate Tribunals shall dispose of complaints within 60 days.
  5. Certification: 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.
  6. Carpet Area: Promoter shall also declare size of the apartment based on carpet area even if it was earlier sold on any other basis.
  7. Registration: 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.
  8. Income Tax Returns: 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.
  9. Fee for Registration: 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.
  10. Information about Details: To enable informed decisions by buyers, Real Estate Regulatory Authorities will 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.

Sources – www.realty.economictimes.indiatimes.com/slide-shows/rera-rules-10-things-to-know-about/55156347

Size of Real Estate Market to grow to USD 650 billion by 2040: Niti Aayog

New Delhi

Indian real estate market is expected to jump over fivefold to USD 650 billion by 2040 and its share in the country’s gross domestic product (GDP) is set to double from the current seven per cent, Niti Aayog Vice-Chairman Rajiv Kumar said Friday.

“The government is committed not only to real estate sector but all aspects of it. The government is very conscious and cognisant of what happening in the sector and how it contributes to the economy,” he said while addressing a global luxury realty conclave organised by India Sotheby’s International Realty.

Kumar said the recent Interim Budget has demonstrated that the government would take steps to make sure that the real estate sector grow and develop further so that this industry contributes even more to the economy.

The Centre has offered a lot of tax incentives to developers building affordable houses and also tax sops to homebuyers looking to purchase second homes.

Highlighting the importance of this sector, the Niti Aayog vice-chairman said the real estate sector is contributing seven per cent to the country’s GDP and its share is expected to double by 2040.

The current size of the real estate market is already USD 120 billion dollar and this will grow to USD 650 billion by 2040, he said, adding that the industry employs 55 million people now and this number will rise to 66 million as it grows.

“This sector is heart of the economy. It has backward linkages with 200 other industries,” Kumar said.

He also said the real estate sector would contribute more with rapid urbanisation.

Kumar said the two legislations — the goods and services tax and the RERA — implemented by the government would help in organised growth of this sector.

He asked real estate companies to blend best of Indian culture and best of global facility and technologies in their future development of properties.

Speaking on the sidelines of the event, Embassy group President (Residential Business) Reeza Sebastian said there is a good demand for completed housing units in all categories including luxury homes.

Tata Housing Managing Director and Chief Executive Officer Sanjay Dutt said the demand for luxury houses is slow and this has given an opportunity to better our product portfolio in terms of design and other services.

Colliers International National Director Gagan Randev said: “Luxury real estate market has become much more discernible with a preference in most markets for gated communities offering a luxury lifestyle. Developers are differentiating their high end products and this has resulted in success of branded residence.”

Gaurs Group MD Manoj Gaur said the luxury housing is looking up and its demand is growing because of a growing number of high networth individual in the country.

Amit Goyal, CEO of India Sotheby’s International Realty, said this is the third edition of global luxury real estate conclave, which provides a platform where all the stakeholders come together to discuss the ever-changing luxury property market.

India Sotheby’s International Realty is part of the of US-based Sotheby’s International Realty, which operates a global network of over 22,000 affiliates with 970 offices across 72 countries, dealing in luxury real estate properties.

Sources – www.realty.economictimes.indiatimes.com/news/industry/size-of-real-estate-market-to-grow-to-usd-650-billion-by-2040-niti-aayog/68114021

Changes in RERA need of hour to achieve growth: Madhya Pradesh RERA chief

Indore

With changing times, lot of technical advancement is happening in real estate sector and maximum utilization of the advancements will set the direction of real estate sector, said head of MP Real Estate Regulatory Authority (Rera) on Friday. “These changes or technical advancement may be a challenge for developers but need of the hour to accept these changes to achieve growth,” Rera chairman Anthony De Sa said on Friday at a seminar on ‘Amendments in RERA’ conducted by Institute of Chartered Accountant Indore branch.

De sa said the aim of Rera is to ease and smoothen real estate market by bringing transparency and responsibility.

Addressing realtors and chartered accounts, he said, “Through Rera, we aim to increase investment in real state sector and protect rights of consumers. Higher investment in the sector will help in recovering from the tough phase.”

Rera chairman said chartered accountants also play an important role in ensuring the norms are followed and true documents are submitted by developers. He said a new format for developers report has been drafted by authorities after suggestions from chartered accountants.

“The pace of any project will be monitored on basis of quarterly return that shall be attested by chartered accountant,” said De Sa.

In Rera, audit of accounts is mandatory for developers. He said as per Section 4(2), it is the role of chartered accountant to check that money received from a particular project is spent only on that project and debit from the account is in accordance with site expenses.

CA should collect all information about project well in advance from developer before handing over certificate to authorities. Institute of Chartered Accountant Indore branch chairman Abhay Sharma said, “Rera has been implemented since past 21 months but still there is lack of awareness. For smooth implementation of real estate act it is important that people are fully aware of their rights and role of Rera that it plays in regulating real estate market.”