Ppt Rera for real estate project Podesta and and llc
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About This Presentation
Presentationg on Estate development for beginners and level 12 upward for down shore
Slide Content
April 2017
Real Estate (Regulation and
Development) Act, 2016
Need for change
Real Estate (Regulation and
Development) Act, 2016
Need for change
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 2
Contents
•RERA –Overview
•Real Estate Act
‒Promoter –Increased responsibility & compliances
‒Liquidity –Cash flow planning
‒Registration –Project registration with RERA
‒Sales & Marketing –Increase in project launch
time
‒Imperatives -Resulting process transformation
•Way forward
•Annexure
Contents
•RERA –Overview
•Real Estate Act
‒Promoter –Increased responsibility & compliances
‒Liquidity –Cash flow planning
‒Registration –Project registration with RERA
‒Sales & Marketing –Increase in project launch
time
‒Imperatives -Resulting process transformation
•Way forward
•Annexure
3©2017 Deloitte Touche Tohmatsu India LLP Real Estate (Regulation and Development) Act, 2016
RERA –Overview
RERA –Overview
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 4
Fundamentals of the Act
RERA
Uniform regulatory environment
Renovation or repair or redevelopment projects not involving Marketing, Advertising, Selling &
New Allotment need not be registered
Commercial and residential
projects including plotted
development
Land under development
more than 500 sq. meter /
No. of
Units exceed 8
Projects which do not have
Completion Certificate
before commencement of
Act
70% of the amount realized to be deposited in separate bank account. To be utilized only to
cover the cost of construction and land cost
Fiscal discipline Precision
Responsibility Customer Centric
Compliance
Fundamentals of the Act
RERA
Uniform regulatory environment
Renovation or repair or redevelopment projects not involving Marketing, Advertising, Selling &
New Allotment need not be registered
Commercial and residential
projects including plotted
development
Land under development
more than 500 sq. meter /
No. of
Units exceed 8
Projects which do not have
Completion Certificate
before commencement of
Act
70% of the amount realized to be deposited in separate bank account. To be utilized only to
cover the cost of construction and land cost
Fiscal discipline Precision
Responsibility Customer Centric
Compliance
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 5
RERA Changes
Promoter –Increased responsibility & compliances
Registration –Project registration with RERA
Sales & Marketing –Increase in project launch time
Operational Transformation –Project Management, Design, Sales
and Marketing
Other Compliances
Way Forward
Liquidity –Cash flow planning
RERA Changes
Promoter –Increased responsibility & compliances
Registration –Project registration with RERA
Sales & Marketing –Increase in project launch time
Operational Transformation –Project Management, Design, Sales
and Marketing
Other Compliances
Way Forward
Liquidity –Cash flow planning
6©2017 Deloitte Touche Tohmatsu India LLP Real Estate (Regulation and Development) Act, 2016
Promoter -Increased
responsibility & compliances
Promoter -Increased
responsibility & compliances
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 7
Whom does it apply to –The Promoter
Promoter
A person who constructs
building for the purpose
of selling
A person who develops
land into a project for
the purpose of selling
Any development
authority or any other
public body
An apex State level co-
operative housing
finance society and a
primary co-operative
housing society
Any other person who
acts himself as builder,
contractor, developer or
claims to be acting as
the holder of a power of
attorney from the owner
of land
Such other person who
constructs any building
or apartment for sale to
general public
Whom does it apply to –The Promoter
Promoter
A person who constructs
building for the purpose
of selling
A person who develops
land into a project for
the purpose of selling
Any development
authority or any other
public body
An apex State level co-
operative housing
finance society and a
primary co-operative
housing society
Any other person who
acts himself as builder,
contractor, developer or
claims to be acting as
the holder of a power of
attorney from the owner
of land
Such other person who
constructs any building
or apartment for sale to
general public
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 8
Promoters -Responsibility
Project registration Advertisement
Withdrawal –POC
method
Website updation/
Disclosures
Carpet area
Alteration in
project –approval
of 2/3 allottees
Project accounts -
Audit
Promoters -Responsibility
Project registration Advertisement
Withdrawal –POC
method
Website updation/
Disclosures
Carpet area
Alteration in
project –approval
of 2/3 allottees
Project accounts -
Audit
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 9
Liability on promoter –few instances
If title of land is defective
Fails to complete or unable to give possession
Any false information to alloteein relation to sanctioned plan or in adherence to sanctioned
plan
If promoter does not provide the information of sanctioned plan, stage wise time schedule
of completion of project
In case project is assigned to third party without prior written consent
If promoter fails to refund the amount within 6 months from the termination of sale
agreement in dispute due to defect in the apartment
Liability on promoter –few instances
If title of land is defective
Fails to complete or unable to give possession
Any false information to alloteein relation to sanctioned plan or in adherence to sanctioned
plan
If promoter does not provide the information of sanctioned plan, stage wise time schedule
of completion of project
In case project is assigned to third party without prior written consent
If promoter fails to refund the amount within 6 months from the termination of sale
agreement in dispute due to defect in the apartment
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 10
Penalties
If any promoter
contravenes the
provisions of
registration -liable to
penalty upto 10% of
the estimated cost of
project as determined
by the Authority.
If any promoter does
not comply with the
orders, decisions or
directions issued or
violate the provisions
of registration -
punishable with
imprisonment upto 3
years or with fine upto
10% of the estimated
cost of the project, or
with both.
If any promoter
provides false
information or
contravenes the
provisions of
registration of real
estate projects -
penalty upto 5% of the
estimated cost of the
project.
If any promoter
contravenes any other
provisions of the Real
Estate Act -penalty
upto 5% of the
estimated cost of the
project as determined
by the Authority
Penalties
If any promoter
contravenes the
provisions of
registration -liable to
penalty upto 10% of
the estimated cost of
project as determined
by the Authority.
If any promoter does
not comply with the
orders, decisions or
directions issued or
violate the provisions
of registration -
punishable with
imprisonment upto 3
years or with fine upto
10% of the estimated
cost of the project, or
with both.
If any promoter
provides false
information or
contravenes the
provisions of
registration of real
estate projects -
penalty upto 5% of the
estimated cost of the
project.
If any promoter
contravenes any other
provisions of the Real
Estate Act -penalty
upto 5% of the
estimated cost of the
project as determined
by the Authority
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 11
Maharashtra RERA Rules –Fine payable for compounding of
offence (Notified)
Offence
Money to be paid for compounding of
offence
Offence under sub section (2) of section 59 –
where promoter fails comply with the orders
decisions regarding registration of the real
estate project
5% of the estimated cost of the real estate
project which may extend upto10%.
Offence under section 64 –where promoter
fails to comply with orders / directions of
REAT
5% of the estimated cost of the real estate
project which may extend upto10%.
Offence under section 66 -where real estate
agent fails to comply with orders / directions
of REAT
5% of the estimated cost of the plot, apartment
or building, of the real estate project, for which
the sale or purchase has been facilitated, which
may extend upto10%.
Offence under section 68 -where allottee
fails to comply with orders / directions of
REAT
5% of the estimated cost of the plot, apartment
or building, which may extend upto10%.
Maharashtra RERA Rules –Fine payable for compounding of
offence (Notified)
Offence
Money to be paid for compounding of
offence
Offence under sub section (2) of section 59 –
where promoter fails comply with the orders
decisions regarding registration of the real
estate project
5% of the estimated cost of the real estate
project which may extend upto10%.
Offence under section 64 –where promoter
fails to comply with orders / directions of
REAT
5% of the estimated cost of the real estate
project which may extend upto10%.
Offence under section 66 -where real estate
agent fails to comply with orders / directions
of REAT
5% of the estimated cost of the plot, apartment
or building, of the real estate project, for which
the sale or purchase has been facilitated, which
may extend upto10%.
Offence under section 68 -where allottee
fails to comply with orders / directions of
REAT
5% of the estimated cost of the plot, apartment
or building, which may extend upto10%.
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 12
Who is the “Promoter” –Open issues
1.Can PE investor be treated as “Promoter” for the
purpose of RERA?
2.In case of a JDA, where the Developer further
sub-contracts the construction work –whether
SPV, Developer or the Contractor is the
“Promoter”?
a.What if the contractor is appointed post the
registration with RERA?
b.Is the sub-contractors default right to be
borne by the person delegating the work?
What if SPV is the “Promoter” and
delegation is done by the developer?
3.In case of JV –whether either of the Landowner
/ Developer or the Investor would be treated as
the “Promoter”?
4.In case of JDA, is it mandatory to declare land
owner as a Promoter specifically considering
that the definition of “Promoter” include “a
person who develops land into a project”.
5.There is a requirement that the “Promoter” to
undertake that it has a legal title to the land.
Thus, can only the land-owning SPV become the
“Promoter”?
PE investor
Land owner Developer
Funding
JDA
JV Company
O/s India
India
1
2 3
SPV
Who is the “Promoter” –Open issues
1.Can PE investor be treated as “Promoter” for the
purpose of RERA?
2.In case of a JDA, where the Developer further
sub-contracts the construction work –whether
SPV, Developer or the Contractor is the
“Promoter”?
a.What if the contractor is appointed post the
registration with RERA?
b.Is the sub-contractors default right to be
borne by the person delegating the work?
What if SPV is the “Promoter” and
delegation is done by the developer?
3.In case of JV –whether either of the Landowner
/ Developer or the Investor would be treated as
the “Promoter”?
4.In case of JDA, is it mandatory to declare land
owner as a Promoter specifically considering
that the definition of “Promoter” include “a
person who develops land into a project”.
5.There is a requirement that the “Promoter” to
undertake that it has a legal title to the land.
Thus, can only the land-owning SPV become the
“Promoter”?
PE investor
Land owner Developer
Funding
JDA
JV Company
O/s India
India
1
2 3
SPV
13©2017 Deloitte Touche Tohmatsu India LLP Real Estate (Regulation and Development) Act, 2016
Liquidity –Cash flow
planning
Liquidity –Cash flow
planning
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 14
Monetary consideration
Conditions imposed on consideration
for real estate projects
70%, of the amounts realized from the
allottees shall be:
deposited in a separate account to be
maintained in a scheduled bank;
Utilization only to cover the cost of
construction and land cost;
Withdrawal only after certification from an
engineer, architect and a chartered
accountant in practice certifying the
withdrawal is proportionate to the
percentage of completion of project
Accounts of promoter needs to be audited
within 6 months of the Financial Year end
Maximum advance / application fee that can
be received by the Promoter, prior to
executing a written agreement for sale is
10% of the cost of the apartment.
Monetary consideration
Conditions imposed on consideration
for real estate projects
70%, of the amounts realized from the
allottees shall be:
deposited in a separate account to be
maintained in a scheduled bank;
Utilization only to cover the cost of
construction and land cost;
Withdrawal only after certification from an
engineer, architect and a chartered
accountant in practice certifying the
withdrawal is proportionate to the
percentage of completion of project
Accounts of promoter needs to be audited
within 6 months of the Financial Year end
Maximum advance / application fee that can
be received by the Promoter, prior to
executing a written agreement for sale is
10% of the cost of the apartment.
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 15
Determining Project Phase
Ongoing Project
Residential + Club house
Residential+ Commercial
+ Retail + Club house
Large Project –Township+
Residential +Commercial
+ Hospitals +Schools
As per notified Maharashtra Rules -“Phase of a Real Estate Project” may consist
of a building or a wing of the building in case of building with multiple wings or
defined number of floors in a multi-storeyedbuilding/wing.
Determining Project Phase
Ongoing Project
Residential + Club house
Residential+ Commercial
+ Retail + Club house
Large Project –Township+
Residential +Commercial
+ Hospitals +Schools
As per notified Maharashtra Rules -“Phase of a Real Estate Project” may consist
of a building or a wing of the building in case of building with multiple wings or
defined number of floors in a multi-storeyedbuilding/wing.
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 16
Notified Maharashtra RERA Rules –Ongoing projects
For ongoing real estate project in
which all buildings/wings as per
sanctioned plan have not received
occupation certificate or the
completion certificate (as the case
may be) has not been issued, 70% of
the amount to be realized from the
allotteesshall be deposited in such
separate account.
In the event where the estimated
receivables of the ongoing project is
less than the estimated cost of
completion of the project, then 100%
of the amount to be realized from the
allotteesshall be deposited in the
said separate account.
Notified Maharashtra RERA Rules –Ongoing projects
For ongoing real estate project in
which all buildings/wings as per
sanctioned plan have not received
occupation certificate or the
completion certificate (as the case
may be) has not been issued, 70% of
the amount to be realized from the
allotteesshall be deposited in such
separate account.
In the event where the estimated
receivables of the ongoing project is
less than the estimated cost of
completion of the project, then 100%
of the amount to be realized from the
allotteesshall be deposited in the
said separate account.
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 17
Project Cost -Funding analysis of ongoing phase
Particulars Details
Project ABC (Ongoing Phase 1+ New Phase 2) -OC not
received
5 acres
Estimated cost of Project ABC Rs. 60 crores
Estimated cost of Phase 1 Rs. 30 crores
Phase1 1 residential building (90%)+ club house
(10%)
No.of floors (two flats per floor) 22 floors (44 flats)
Total floors completed 10 floors (20 flats)
No. of flats sold 15
Cost of flat Rs. 1 crore
Total sale consideration received (70% of Rs.15 crore) Rs. 10.5 crores
Expenditure incurred on Phase 1 till date Rs. 8 crores
Remaining funds left inproject account (10.5 –8) Rs. 2.5 crores
Fundspending to be realized (for 15 flats) Rs. 4.5 crores
Since the estimated receivables (Rs. 4.5 crores) is less than estimated cost of completion of project (Rs.
30 crores) –100% of amount to be realized (Rs. 4.5 crores) to be kept in separate bank account
Project Cost -Funding analysis of ongoing phase
Particulars Details
Project ABC (Ongoing Phase 1+ New Phase 2) -OC not
received
5 acres
Estimated cost of Project ABC Rs. 60 crores
Estimated cost of Phase 1 Rs. 30 crores
Phase1 1 residential building (90%)+ club house
(10%)
No.of floors (two flats per floor) 22 floors (44 flats)
Total floors completed 10 floors (20 flats)
No. of flats sold 15
Cost of flat Rs. 1 crore
Total sale consideration received (70% of Rs.15 crore) Rs. 10.5 crores
Expenditure incurred on Phase 1 till date Rs. 8 crores
Remaining funds left inproject account (10.5 –8) Rs. 2.5 crores
Fundspending to be realized (for 15 flats) Rs. 4.5 crores
Since the estimated receivables (Rs. 4.5 crores) is less than estimated cost of completion of project (Rs.
30 crores) –100% of amount to be realized (Rs. 4.5 crores) to be kept in separate bank account
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 18
Notified Maharashtra RERA Rules -Withdrawal of amounts by
Promoter deposited in separate account
The promoter to submit following 3 certificates to the Bank operating the separate account
[Rule 5(1)(i)(b)]
•First from the project Architect certifying the percentage of completion of construction
work of each of the building / wing of the project.
•Second certificate from the Engineer for the actual cost incurred on the construction work
of each of the building / wing of the project.
•Third certificate from a CA for the cost incurred on construction cost and the land cost.
The CA to also certify the proportion of the cost incurred on construction and
land cost to the total estimated cost of the project. The total estimated cost of
the project multiplied by such proportion shall determine the maximum amount
which can be withdrawn by the promoter from the escrow/ separate account.
The promoter shall be required to follow the aforesaid procedure at the time of every
withdrawal from the separate account till Occupation Certificate in respect of the project is
obtained. On receipt of Completion Certificate in respect of the project, the entire balance
amount lying in the separate account can be withdrawn by the promoter.
Notified Maharashtra RERA Rules -Withdrawal of amounts by
Promoter deposited in separate account
The promoter to submit following 3 certificates to the Bank operating the separate account
[Rule 5(1)(i)(b)]
•First from the project Architect certifying the percentage of completion of construction
work of each of the building / wing of the project.
•Second certificate from the Engineer for the actual cost incurred on the construction work
of each of the building / wing of the project.
•Third certificate from a CA for the cost incurred on construction cost and the land cost.
The CA to also certify the proportion of the cost incurred on construction and
land cost to the total estimated cost of the project. The total estimated cost of
the project multiplied by such proportion shall determine the maximum amount
which can be withdrawn by the promoter from the escrow/ separate account.
The promoter shall be required to follow the aforesaid procedure at the time of every
withdrawal from the separate account till Occupation Certificate in respect of the project is
obtained. On receipt of Completion Certificate in respect of the project, the entire balance
amount lying in the separate account can be withdrawn by the promoter.
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 19
Withdrawal of funds -% of completion
Particulars Details
Total saleablearea 5,000 Sq. ft.
Estimated Project Cost
(This comprises land cost of Rs. 300 Lakhs and construction costs of Rs. 300
Lakhs)
Rs. 600 lakhs
Cost incurred till end of reporting period
(This includes land cost of Rs 300 Lakhs and construction cost of Rs 60
Lakhs)
Rs. 360 lakhs
Total area sold till the date of reporting period 1,000Sq. ft.
Total sale consideration as per agreements of sale executed Rs. 200 lakhs
70%to be kept in separate bank account Rs. 140 lakhs
% of completion of project
(360/600*100)
60% of total project cost
(including land cost)
Amount that can be withdrawn(60% of Rs. 140 lakhs) Rs. 84 lakhs
Withdrawal of funds -% of completion
Particulars Details
Total saleablearea 5,000 Sq. ft.
Estimated Project Cost
(This comprises land cost of Rs. 300 Lakhs and construction costs of Rs. 300
Lakhs)
Rs. 600 lakhs
Cost incurred till end of reporting period
(This includes land cost of Rs 300 Lakhs and construction cost of Rs 60
Lakhs)
Rs. 360 lakhs
Total area sold till the date of reporting period 1,000Sq. ft.
Total sale consideration as per agreements of sale executed Rs. 200 lakhs
70%to be kept in separate bank account Rs. 140 lakhs
% of completion of project
(360/600*100)
60% of total project cost
(including land cost)
Amount that can be withdrawn(60% of Rs. 140 lakhs) Rs. 84 lakhs
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 20
What is included in Land cost and construction cost for
ascertaining the cost of completion of % of the project
Notified Maharashtra RERA Rules
Land Cost
Construction cost
•The costs incurred by the Promoter for acquisition of ownership and title of the
land parcels
•Premium payable to obtain development or redevelopment rights
•Amount paid for acquisition of TDR
•Premium for grant of FSI, fungible FSI
•Consideration payable to the outgoing developer to relinquish ownership and title
rights over such land parcels
•Amounts payable to State Government or Competent Authority towards stamp
duty etc.
•ASR linked premiums payable by Promoter
•All such costs, incurred by the Promoter, towards the on-site and off-site expenditure
•Payment of taxes, charges to any competent authority / statutory authority
•Principal sums, interest paid / payable to any financial institutions
What is included in Land cost and construction cost for
ascertaining the cost of completion of % of the project
Notified Maharashtra RERA Rules
Land Cost
Construction cost
•The costs incurred by the Promoter for acquisition of ownership and title of the
land parcels
•Premium payable to obtain development or redevelopment rights
•Amount paid for acquisition of TDR
•Premium for grant of FSI, fungible FSI
•Consideration payable to the outgoing developer to relinquish ownership and title
rights over such land parcels
•Amounts payable to State Government or Competent Authority towards stamp
duty etc.
•ASR linked premiums payable by Promoter
•All such costs, incurred by the Promoter, towards the on-site and off-site expenditure
•Payment of taxes, charges to any competent authority / statutory authority
•Principal sums, interest paid / payable to any financial institutions
21©2017 Deloitte Touche Tohmatsu India LLP Real Estate (Regulation and Development) Act, 2016
Registration –Project
registration with RERA
Registration –Project
registration with RERA
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 22
Ongoing Real Estate Projects
* From the date of notification of registration provisions under the Real Estate Act.
Projects completed with
the completion
certificate issued as on
the date of
commencement of the
Real Estate Act
Project completed,
however completion
certificate is pending as
on the date of
commencement of the
Real Estate Act
Will require registration
with the RERA within a
period of 3 months*
Will require
registration with the
RERA within a period
of 3 months*
Does not require any
registration with the
RERA
All On going projects
Ongoing Real Estate Projects
* From the date of notification of registration provisions under the Real Estate Act.
Projects completed with
the completion
certificate issued as on
the date of
commencement of the
Real Estate Act
Project completed,
however completion
certificate is pending as
on the date of
commencement of the
Real Estate Act
Will require registration
with the RERA within a
period of 3 months*
Will require
registration with the
RERA within a period
of 3 months*
Does not require any
registration with the
RERA
All On going projects
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 23
Prior registration of real estate projects
All real estate projects need to be registered with the RERAbefore the Promoter
advertise, market, book, sell or offer for sale, or invite persons to purchase in any
manner any real estate project, or part of it, in any planning area except if :
•The area of land proposed to be developed is < 500 Sq. m;
•The number of apartments proposed to be developed < 8;
•The Promoter has received completion certificate for a real estate project prior to
commencement of the Real Estate Act;
•The project is only for the purpose of renovation / repair / re-development which does not
involve re-allotment and marketing, advertising, selling or new allotment of any
apartments, plot or building in the real estate project.
Each Phase is to be treated as standalone real estate project requiring
fresh registration
Prior registration of real estate projects
All real estate projects need to be registered with the RERAbefore the Promoter
advertise, market, book, sell or offer for sale, or invite persons to purchase in any
manner any real estate project, or part of it, in any planning area except if :
•The area of land proposed to be developed is < 500 Sq. m;
•The number of apartments proposed to be developed < 8;
•The Promoter has received completion certificate for a real estate project prior to
commencement of the Real Estate Act;
•The project is only for the purpose of renovation / repair / re-development which does not
involve re-allotment and marketing, advertising, selling or new allotment of any
apartments, plot or building in the real estate project.
Each Phase is to be treated as standalone real estate project requiring
fresh registration
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 24
Application process
No project promotions / advertisements/ marketing permitted before
registration.
Application for registration to disclose:
•Details of the enterprise including its name, registered address etc.;
•Details of the projects launched, in past 5 years including current
status, details of cases pending, if any;
•Certified true copy of the commencement certificate from the
appropriate authority (each phase);
•Layout plan -whole project and each phase sanctioned by appropriate
authority;
•Development works plan and proposed facilities;
•Sample agreements proposed to be signed with the allottees;
•Number and the carpet area of apartments in the project;
•Names and addresses of real estate agents, if any, for the proposed
project;
•Names and addresses of the contractors, architect, structural
engineer, any other persons concerned with the development of the
proposed project;
•Declaration, supported by an affidavit, signed by the Developer or
any person authorized by the developer, stating:
−that the developer has a legal title to the land;
−land is free from all encumbrances;
−Approximate period for completion of project.
Promoter
RERA
Registration certificate
Deemed registration
Make an
application
Grant of
registration within
30 days
Failure to register
within 30 days
Application process
No project promotions / advertisements/ marketing permitted before
registration.
Application for registration to disclose:
•Details of the enterprise including its name, registered address etc.;
•Details of the projects launched, in past 5 years including current
status, details of cases pending, if any;
•Certified true copy of the commencement certificate from the
appropriate authority (each phase);
•Layout plan -whole project and each phase sanctioned by appropriate
authority;
•Development works plan and proposed facilities;
•Sample agreements proposed to be signed with the allottees;
•Number and the carpet area of apartments in the project;
•Names and addresses of real estate agents, if any, for the proposed
project;
•Names and addresses of the contractors, architect, structural
engineer, any other persons concerned with the development of the
proposed project;
•Declaration, supported by an affidavit, signed by the Developer or
any person authorized by the developer, stating:
−that the developer has a legal title to the land;
−land is free from all encumbrances;
−Approximate period for completion of project.
Promoter
RERA
Registration certificate
Deemed registration
Make an
application
Grant of
registration within
30 days
Failure to register
within 30 days
25©2017 Deloitte Touche Tohmatsu India LLP Real Estate (Regulation and Development) Act, 2016
Sales & Marketing –
Increase in project launch
time
Sales & Marketing –
Increase in project launch
time
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 26
Marketing and sale
Advertisem
ent -Clear
and crisp
No false
information
Deliver what is
promised
Marketing and sale
Advertisem
ent -Clear
and crisp
No false
information
Deliver what is
promised
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 27
Real estate agent
Registration Marketing Unfair trade practice
Promoter / developer to ensure that the agent appointed should be
registered and provides only such services that are intended to be offered.
Open issues:
•Is promoter / builder liable for unfair trade practices of an agent /
unregistered and vice versa?
•Is marketing or publicity, not inviting sales, allowed viz. hoardings etc.?
Real estate agent
Registration Marketing Unfair trade practice
Promoter / developer to ensure that the agent appointed should be
registered and provides only such services that are intended to be offered.
Open issues:
•Is promoter / builder liable for unfair trade practices of an agent /
unregistered and vice versa?
•Is marketing or publicity, not inviting sales, allowed viz. hoardings etc.?
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 28
Agreement for Sale to include –RERA
(Based on Model Agreement)
Promoter rights to the title to the land/
POA for development rights
Registration details of Project by the
Promoter with RERA
Carpet area of flat/apartment sold and
confirmation by Promoter on final
carpet area allotted to allottee
Time Schedule for completion of project
with specified date for handover of
possession to allottee
Sanctioned Plan, Layout and
Specifications agreed for construction
Execution of conveyance deed –
handover the possession of land and
building to society
Detailed Promoter representations on
land and construction of project
Cancellation by Allottee/ Compensation
by Promoter in case of default
Agreement for Sale to include –RERA
(Based on Model Agreement)
Promoter rights to the title to the land/
POA for development rights
Registration details of Project by the
Promoter with RERA
Carpet area of flat/apartment sold and
confirmation by Promoter on final
carpet area allotted to allottee
Time Schedule for completion of project
with specified date for handover of
possession to allottee
Sanctioned Plan, Layout and
Specifications agreed for construction
Execution of conveyance deed –
handover the possession of land and
building to society
Detailed Promoter representations on
land and construction of project
Cancellation by Allottee/ Compensation
by Promoter in case of default
29©2017 Deloitte Touche Tohmatsu India LLP Real Estate (Regulation and Development) Act, 2016
Operational
Transformation
Operational
Transformation
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 30
Operational Transformation
Impact on
business
model/
Partners
Project
development
–Cash flow
planning
Superior
Project
Management
Design
Management
Increase in
sales
efficiency
Cohesive
approach across
departments –
Sales, Finance,
Marketing and
Contracts
The Real Estate
(Regulations &
Development) Act, 2016
Awareness
Change &
Readiness
Discipline Monitoring
•Identifying key
stakeholders
•Impact Analysis,
Workshops and
discussions
•Conducting health
check
•Changes to ERP
•Compliance
focused
•Changes to
process
•Co-ordinated
approach across
functions
•Changes to control
environment
•MIS and score
cards
•Performance
Management
Operational Transformation
Impact on
business
model/
Partners
Project
development
–Cash flow
planning
Superior
Project
Management
Design
Management
Increase in
sales
efficiency
Cohesive
approach across
departments –
Sales, Finance,
Marketing and
Contracts
The Real Estate
(Regulations &
Development) Act, 2016
Awareness
Change &
Readiness
Discipline Monitoring
•Identifying key
stakeholders
•Impact Analysis,
Workshops and
discussions
•Conducting health
check
•Changes to ERP
•Compliance
focused
•Changes to
process
•Co-ordinated
approach across
functions
•Changes to control
environment
•MIS and score
cards
•Performance
Management
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 31
Business process framework
Product & Service
Innovation
Planning &
Reporting
Supply Chain
Management
Sales Management
Corporate Shared
Services
Product
Innovation &
offerings
Baseline
schedule and
budget
Requisition
Price approval
and masters
Formation of
Society
Financial
Management/
Reporting
Design
Management
Impact Analysis
of Revisions
Contracts
Management
Advertising
Handover
SAP
Configuration
Communication
Management
Monitoring of
Budget and
Schedules
Procurement
Management
Broker
Management
Cash Flow
Management
Pricing and
Schemes
Project cash flow
planning
Inventory
Management
Sales &
Customer
agreements
Borrowings
Project details
and MIS and
review
Bill certification
and payment
Collections
Human
Resources &
Payroll
Equipment
Management
Registration
Legal &
Regulatory
Business
Development
Target Markets/
Asset Class
Pre Feasibility
Study
Land lease/ buy
/ JDA
Financial Closure
FSI
Determination
Sanction Plans/
Layout
Approvals
Directimpact Nodirectimpact
The Company’s processes can be depicted as follows. This would form the basis of
identification of business cycles/ processes that will have an impact as per our assessment.
Business process framework
Product & Service
Innovation
Planning &
Reporting
Supply Chain
Management
Sales Management
Corporate Shared
Services
Product
Innovation &
offerings
Baseline
schedule and
budget
Requisition
Price approval
and masters
Formation of
Society
Financial
Management/
Reporting
Design
Management
Impact Analysis
of Revisions
Contracts
Management
Advertising
Handover
SAP
Configuration
Communication
Management
Monitoring of
Budget and
Schedules
Procurement
Management
Broker
Management
Cash Flow
Management
Pricing and
Schemes
Project cash flow
planning
Inventory
Management
Sales &
Customer
agreements
Borrowings
Project details
and MIS and
review
Bill certification
and payment
Collections
Human
Resources &
Payroll
Equipment
Management
Registration
Legal &
Regulatory
Business
Development
Target Markets/
Asset Class
Pre Feasibility
Study
Land lease/ buy
/ JDA
Financial Closure
FSI
Determination
Sanction Plans/
Layout
Approvals
Directimpact Nodirectimpact
The Company’s processes can be depicted as follows. This would form the basis of
identification of business cycles/ processes that will have an impact as per our assessment.
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 32
Process redesigning for RERA compliance -Illustrative
•Advertisement (any form/ manner) to be
issued only after confirmation from Legal
& Regulatory team on project been
registered
•Advertisement / prospectus /
communication to be based on details
provided by project management team
and verified by an independent person
prior to compliant
•Show Flats and advertisement
•Broker Management
•Cash flow planning –Internal funds/
External financing/ cash flow from
allotees
•Detailed MIS on planned v/s actual
cash flows
•Monthly transfer of funds from
escrow account –fund transfer
request form to be approved by
appropriate authority
•Withdrawal / utilization of funds to be
supported by calculation as laid down
in RERA and approved by appropriate
authority
•Customer Relationship Management
•Change in payment schedule attached to
the allotment letter
•Legal & Regulatory team to maintain a
dashboard on registration status
•Flat registration details updated in SAP.
Issuance of demand letters (exceeding
10%) subject to registration updated in
SAP
•Legal & regulatory team to communicate
the chargeable rate of interest for
updating in SAP
•Effective project scheduling
management and project budgets
•Enhanced coordination amongst
various stakeholders
•Contractor management/ liability
•Change Impact Analysis
•Delivery Management Capabilities
•SAP Configuration
Project Management
Project cash flow planning &
Cash flow management
Design Management
Sales Management Marketing & Advertisement
•Prioritise design management and design
brief process
•Finalisation of FSI
•Various structures and space allocation
like podium, clubhouse extra space etc
Process redesigning for RERA compliance -Illustrative
•Advertisement (any form/ manner) to be
issued only after confirmation from Legal
& Regulatory team on project been
registered
•Advertisement / prospectus /
communication to be based on details
provided by project management team
and verified by an independent person
prior to compliant
•Show Flats and advertisement
•Broker Management
•Cash flow planning –Internal funds/
External financing/ cash flow from
allotees
•Detailed MIS on planned v/s actual
cash flows
•Monthly transfer of funds from
escrow account –fund transfer
request form to be approved by
appropriate authority
•Withdrawal / utilization of funds to be
supported by calculation as laid down
in RERA and approved by appropriate
authority
•Customer Relationship Management
•Change in payment schedule attached to
the allotment letter
•Legal & Regulatory team to maintain a
dashboard on registration status
•Flat registration details updated in SAP.
Issuance of demand letters (exceeding
10%) subject to registration updated in
SAP
•Legal & regulatory team to communicate
the chargeable rate of interest for
updating in SAP
•Effective project scheduling
management and project budgets
•Enhanced coordination amongst
various stakeholders
•Contractor management/ liability
•Change Impact Analysis
•Delivery Management Capabilities
•SAP Configuration
Project Management
Project cash flow planning &
Cash flow management
Design Management
Sales Management Marketing & Advertisement
•Prioritise design management and design
brief process
•Finalisation of FSI
•Various structures and space allocation
like podium, clubhouse extra space etc
33©2017 Deloitte Touche Tohmatsu India LLP Real Estate (Regulation and Development) Act, 2016
Way forward
Way forward
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 34
Way forward
1
2
3
4
5
Conceptualization of phases and making application to Real Estate
Regulatory Authority for registration of the projects
Aligning of agreements, transaction documents etc. in compliance with
RERA
Impact Analysis -RERA readiness, project risk assessment and funding
requirements
Certification requirement, process compliance audits
Operational transformation
Way forward
1
2
3
4
5
Conceptualization of phases and making application to Real Estate
Regulatory Authority for registration of the projects
Aligning of agreements, transaction documents etc. in compliance with
RERA
Impact Analysis -RERA readiness, project risk assessment and funding
requirements
Certification requirement, process compliance audits
Operational transformation
35©2017 Deloitte Touche Tohmatsu India LLP Real Estate (Regulation and Development) Act, 2016
Annexure
Annexure
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 36
Governing Bodies
Central
Government
Central Advisory
council
State Government
RERA
BMC / Local Authority
Developer Broker / Agent
Directions for
implementation of
Real Estate Act,
consumer protection
etc.
Approvals / Registrations to be obtained
Setting -up
Governing Bodies
Central
Government
Central Advisory
council
State Government
RERA
BMC / Local Authority
Developer Broker / Agent
Directions for
implementation of
Real Estate Act,
consumer protection
etc.
Approvals / Registrations to be obtained
Setting -up
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 37
The Build up to the Real Estate Act
Bill passed by
RajyaSabha
on 10 March
2016
Lok Sabha
passed the Bill
on 15 March
2016
President of
India accorded
his assent to
the Bill on 25
March 2016
69 sections of
92 of the Real
Estate Act
notified comes
into force
effective 1 May
2016
Formation of
Rules by 31
October 2016
Establishment
of Real Estate
Regulatory
Authority
(RERA) and
Real Estate
Appellate
Tribunal
(REAT) –by
April 2017
Notified Sections –69 of 92:
•Sections that provide operative framework under the Real Estate Act are notified.
•Sections with respect to registration of projects with RERA and having practical implications on developers
are yet to be notified
The Build up to the Real Estate Act
Bill passed by
RajyaSabha
on 10 March
2016
Lok Sabha
passed the Bill
on 15 March
2016
President of
India accorded
his assent to
the Bill on 25
March 2016
69 sections of
92 of the Real
Estate Act
notified comes
into force
effective 1 May
2016
Formation of
Rules by 31
October 2016
Establishment
of Real Estate
Regulatory
Authority
(RERA) and
Real Estate
Appellate
Tribunal
(REAT) –by
April 2017
Notified Sections –69 of 92:
•Sections that provide operative framework under the Real Estate Act are notified.
•Sections with respect to registration of projects with RERA and having practical implications on developers
are yet to be notified
Real Estate (Regulation and Development) Act, 2016©2017 Deloitte Touche Tohmatsu India LLP 38
Key objectives
Two main objectives
•Ensuring efficiency and transparency in the real estate sector;
•Protecting consumer interest by promoting fair play in the sector; and
•Encourages timely delivery of projects.
The Real Estate Act envisages achieving the said objectives by:
•Establishing the Real Estate Regulatory Authority (RERA) for regulation and
promotion of the real estate sector;
−Registration of the real estate project; and
−Registration of the real estate agents
•Ensuring sale of plot, apartment or building in an efficient and transparent manner and to
protect the interest of consumers in the real estate sector;
•Establishing the Real Estate Appellate Tribunal (REAT).
Key objectives
Two main objectives
•Ensuring efficiency and transparency in the real estate sector;
•Protecting consumer interest by promoting fair play in the sector; and
•Encourages timely delivery of projects.
The Real Estate Act envisages achieving the said objectives by:
•Establishing the Real Estate Regulatory Authority (RERA) for regulation and
promotion of the real estate sector;
−Registration of the real estate project; and
−Registration of the real estate agents
•Ensuring sale of plot, apartment or building in an efficient and transparent manner and to
protect the interest of consumers in the real estate sector;
•Establishing the Real Estate Appellate Tribunal (REAT).
Deloitte refers to one or more of Deloitte ToucheTohmatsu Limited, a UK private company limited by guarantee (“DTTL”),
its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and
independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see
www.deloitte.com/about for a more detailed description of DTTL and its member firms.
This material is prepared by Deloitte ToucheTohmatsu India LLP (DTTILLP). This material (including any information
contained in it) is intended to provide general information on a particular subject(s) and is not an exhaustive treatment of
such subject(s) or a substitute to obtaining professional services or advice. This material may contain information sourced
from publicly available information or other third party sources. DTTILLP does not independently verify any such sources
and is not responsible for any loss whatsoever caused due to reliance placed on information sourced from such sources.
None of DTTILLP, Deloitte ToucheTohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte
Network”) is, by means of this material, rendering any kind of investment, legal or other professional advice or services.
You should seek specific advice of the relevant professional(s) for these kind of services. This material or information is not
intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any
decision or taking any action that might affect your personal finances or business, you should consult a qualified
professional adviser.
No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person or entity by reason
of access to, use of or reliance on, this material. By using this material or any information contained in it, the user accepts
this entire notice and terms of use.
©2017 Deloitte Touche Tohmatsu India LLP. Member of Deloitte ToucheTohmatsu Limited
Deloitte ToucheTohmatsu India Private Limited (U74140MH199 5PTC093339), a private company limited by shares, was
converted into Deloitte ToucheTohmatsu India LLP, a limited liability partnership (LLP Identification No. AAE 8458),with
effect from October 1, 2015.
its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and
independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see
www.deloitte.com/about for a more detailed description of DTTL and its member firms.
This material is prepared by Deloitte ToucheTohmatsu India LLP (DTTILLP). This material (including any information
contained in it) is intended to provide general information on a particular subject(s) and is not an exhaustive treatment of
such subject(s) or a substitute to obtaining professional services or advice. This material may contain information sourced
from publicly available information or other third party sources. DTTILLP does not independently verify any such sources
and is not responsible for any loss whatsoever caused due to reliance placed on information sourced from such sources.
None of DTTILLP, Deloitte ToucheTohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte
Network”) is, by means of this material, rendering any kind of investment, legal or other professional advice or services.
You should seek specific advice of the relevant professional(s) for these kind of services. This material or information is not
intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any
decision or taking any action that might affect your personal finances or business, you should consult a qualified
professional adviser.
No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person or entity by reason
of access to, use of or reliance on, this material. By using this material or any information contained in it, the user accepts
this entire notice and terms of use.
©2017 Deloitte Touche Tohmatsu India LLP. Member of Deloitte ToucheTohmatsu Limited
Deloitte ToucheTohmatsu India Private Limited (U74140MH199 5PTC093339), a private company limited by shares, was
converted into Deloitte ToucheTohmatsu India LLP, a limited liability partnership (LLP Identification No. AAE 8458),with
effect from October 1, 2015.
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