Rera[1029]

In this presentation we discus about the impact of Rera ON INDIAN real estate, the law under the RERA as per the Central government, how to register complaint under RERA etc

1. EFFECT OF RERA on Indian Real Estate Presente d by Suraj Pande Sayan Biswas Nishanth BN

2. RERA (REAL ESTATE REGULATORY ACT)

3. RERA (REAL ESTATE REGULATORY ACT) The Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act passed by the Indian Parliament which intends to protect the interests of home buyers and enhance transparency in the real estate sector. They examine how it will affect various stakeholders – from home buyers and builders, to brokers – and the provisions and penalties prescribed under the act. The Government of India enacted the Real Estate (Regulation and Development) Act 2016 on 26th March 2016 and all its provisions came into effect, from May 1, 2017.

4. HISTORY OF RERA The Rajya Sabha passed the RERA bill on March 10, 2016 , followed by the Lok Sabha on March 15, 2016 and it came into force from May 1, 2016. 59 of its 92 sections were notified on May 1, 2016 and the remaining provisions came into force from May 1, 2017. Under the Act, the central and state governments, are required to notify their own rules under the Act, six months, based on the model rules framed under the central Act.

5. WHY RERA? For long, home buyers have complained that real estate transactions were lopsided and heavily in favour of the developers. RERA and the government’s model code, aim to create a more equitable and fair transaction between the seller and the buyer of properties, especially in the primary market. RERA, it is hoped, will make real estate purchase simpler, by bringing in better accountability and transparency, provided that states do not dilute the provisions and the spirit of the central act. The RERA will give the Indian real estate industry its first regulator. The Real Estate Act makes it mandatory for each state and union territory, to form its own regulator and frame the rules that will govern the functioning of the regulator.

6. NEED OF RERA ACT To maintain the interest of both the developers & buyers. To give detailed specifications of design, quantity and types of material, cost of the building, etc. to RERA regulatory board. Every building has its specific RERA number with its specific bank account . Initially to start a project, developer has to deposit the total cost of that project in the bank account. Transaction between buyer & developer is done through bank only. Developer can use only 30% of buyer’s amount (given as initial amount as per the contract). remaining amount developer has to keep mandatorily in bank account only. Developer has to give full details of company or person from where he is buying the material.

7. RERA-Projects Commercial and residential projects including plotted development. Projects measuring more than 500 sq. mts or 8 units. Projects without Completion Certificate, before commencement of the 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, will not come under RERA. Each phase is to be treated as standalone real estate project requiring fresh registration.

8. RERA-Registering Projects Authenticated copy of all approvals, commencement certificate, sanctioned plan, layout plan, specification, plan of development work, proposed facilities, Proforma allotment letter, agreement for sale and conveyance Need to be given. Applying for project registration with RERA. Mandatory registration of new and existing projects with RERA before launch. Registration of agents/brokers with RERA. Dispute resolution within 6 months at RERA and RERA appellate tribunals.

9. RERA-Registering Projects (cont.) Separate registration of different phases of a single projects. Developers to share details of projects launched in last 5 years with status and reason for delay with RERA. Timely updating of RERA website. Maximum 1 year extension in case of delay due to no fault of developer. Annual audit of project accounts by a CA. Conveyance deed for common area in favour of RWA. Construction and land title insurance. Project completion time period.

10. RERA-Carpet Area According to the RERA, carpet area is defined as ‘the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or veranda area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’ .

11. RERA-Carpet Area (cont.) Rahul Shah, CEO of Sumer Group, points out that “As per the RERA guidelines, a builder must disclose the exact carpet area, so that a customer knows what he is paying for. However, the act does not make it mandatory for the builders, to sell a flat on the basis of carpet area.”

12. RERA – In States As on July 31, 2017, 23 states and union territories (UTs) have either established their permanent or interim regulatory authorities. Under the RERA, every state and UT must have its own regulator. Developers will not be able to market their ongoing or upcoming projects, till they register either with the permanent or interim regulator in states. For ongoing projects, where completion or occupancy certificate has not been given, the deadline for registration ended on July 31, 2017.

13. Impact of RERA With the advent of RERA Specialised forums such as the State Real Estate Regulatory Authority and the Real Estate Appellate Tribunal will be established Resolution of disputes pertaining to home buying and the aggrieved party will have no recourse to other consumer forums and civil courts, on such matters. While the RERA sets the groundwork for fast-tracking dispute resolution, the litmus test for its success, will depend on the timely setting up of these new dispute resolution bodies and how these disputes are resolved expeditiously with a degree of finality

14. Impact of RERA (cont.) Initial backlog. Increased project cost. Tight liquidity. Rise in cost of capital. Consolidation. Increase in project launch time. Initially, a lot of work is to be done to get the existing and new project registered. Details such as status of each project executed in last 5 years, promoter details, detailed execution plans, etc., needs to be prepared.

15. RERA for HOME BUYERS Informing allottees about any minor addition or modification Consent of two-third allottees about any other addition or modification No launch or advertisement before registration with RERA Consent of two-third allottees for transferring majority rights to a third party Sharing information about project plan, layout, government approvals, land title status, sub-contractors Increased affirmation on completion of projects and delivery to the consumers within time An increase in the quality of construction due to a defect liability period of five years Formation of RWA within a specified time or three months after majority of units have been sold

16. RERA for BUILDERS Project registration Advertisement Withdrawal – POC method Website updates/disclosures Carpet area Alteration in project – approval of two-third allottees Project accounts – Audit

17. RERA for BUILDERS (cont.) 70% of the funds collected from allottees needs to be deposited in the Project/Reserve Account; withdrawals to cover construction and land cost Withdrawals to be in proportion with the percentage of completion of the project Withdrawal to be certified by an Engineer, an Architect, and a Chartered Accountant Provision for RERA to freeze project bank accounts or Reserve Account upon non-compliance Interest on delay will be same for both customer and promoter

18. REAL ESTATE for BROKERS Under the Real Estate (Regulation and Development) Act (RERA), real estate agents will need to register themselves, to be able to facilitate a transaction. The broker segment in India, is estimated to be a USD 4 billion industry, with an estimated 5,00,000 to 9,00,000 brokers. However, it has traditionally been unorganised and unregulated. With RERA in force, brokers cannot promise any amenities or services that are not mentioned in the documents. Moreover, they will have to provide all information and documents to the home buyers, at the time of booking. Consequently, RERA is likely to filter out the inexperienced, unprofessional, fly-by-night operators, as brokers not following the guidelines will face hefty penalty or jail or both.

19. REAL ESTATE for BROKERS (cont.) “It will bring a lot of accountability in the industry and the ones who believe in professional and transparent business, will reap all the benefits. Now, the agents will have a much larger and responsible role to perform, as they will have to disclose all the appropriate information to the customer and even help them chose a RERA-compliant developer,” says Sam Chopra, founder and chairman of RE/MAX India.

20. BROKERS BECAME RERA COMPLIANT Section 3 : Promoter cannot advertise, book, sell or offer for sale, without registration with RERA. Section 9 : No agent can sell any project without obtaining RERA registration. Agents’ RERA number needs to be documented in every sale facilitated by him. Registration needs to be renewed. Registration can be revoked or blocked if any breach is made to conditions of registration for a specified time.

21. Section 10: No agent can sell a project not registered. Maintain books and records. Not be involved in unfair trade practices. Make an incorrect statement – oral, written, visual. Represent that services are of a particular standard. Represent that the promoter or himself has approval or affiliation which such promoter or himself does not have. Permit publication of advertisement in the newspaper or otherwise of services not intended to be offered. Agent needs to facilitate possession of all documents to the allottee at the time of booking. BROKERS BECAME RERA COMPLIANT (cont.)

22. FILE COMPLAINT UNDER RERA A complaint under the RERA, is required to be in the form prescribed under the respective states’ rules. The complaint can be filed with respect to a project registered under RERA, within the prescribed time limit, for violation or contravention of provisions of the act or the rules or regulations framed under RERA.

23. “For cases pending before the NCDRC ( NATIONAL CONSUMER DISPUTES REDRESSAL COMMISION) or other consumer fora, the complainants/ allottees can withdraw the case and approach the authority under the RERA. Other offences (except complaints under Section 12, 14, 18 and 19) can be filed before the RERA authority,” explains Ajay Monga, partner at SNG & Partners law firm. FILE COMPLAINT UNDER RERA (cont.)

24. Digbijoy Bhowmik, head of policy, RICS ( ROYAL INSTITUTION OF CHARTER SURVEYOURS), explains, “Complaints can be filed under Section 31 of the Real Estate (Regulation and Development) Act, 2016, either with the Real Estate Regulatory Authority or the adjudicating officer. Such complaints may be against promoters, allottees and/or real estate agents. Most state government rules, made appurtenant to the RERA, have laid out the procedure and form, in which such applications can be made. In the case of Chandigarh UT or Uttar Pradesh, for instance, these are placed as Form ‘M’ or Form ‘N’ (common with most other states and union territories).” FILE COMPLAINT UNDER RERA (cont.)

25. RERA – Offence Wise Penalties For Promoters

26. RERA – Offence Wise Penalties For Real Estate Agents

27. RERA – Offence Wise Penalties For Allotees

28. Benefits of RERA INDUSTRY Governance and transparency Project efficiency and robust project delivery Standardization and quality Enhance confidence of investors Attract higher investments and PE funding Regulated Environment

29. Benefits of RERA (cont.) DEVELOPER Common and best practices Increase efficiency Consolidation of sector Corporate branding Higher investment Increase in organised funding

30. Benefits of RERA (cont.) BUYER Significant buyers protection Quality products and timely delivery Balanced agreements and treatment Transparency – sale based on carpet area Safety of money and transparency on utilisation

31. Benefits of RERA (cont.) AGENTS Consolidation of sector (due to mandatory state registration) Increased transparency Increased efficiency Minimum litigation by adopting best practices

32. RERA - REAL EXAMPLE MUMBAI: Maharashtra Real Estate and Regulatory Authority (RERA) recently directed a builder to repay with interest Rs. 25 lakh including a cash amount of about Rs. 4.5 lakh paid four years ago by a buyer for a flat in Virar who now wants to cancel his booking as the possession was delayed by four years. The order underscores the importance of keeping copies of every document, including uncashed cheques, while buying property. For, Pradeep Bedre, a person who had booked a flat in “Shree Shakun Greens” it was a photocopy of a cheque that partly helped him before RERA when he knocked at its door for a refund.

33. RERA - REAL EXAMPLE (cont.) Rajyavardhan Rathore settles with Parsvnath Developers refuses flat and demands to get back Rs. 3 crore. Rathore had paid Rs. 75 lakh in 2005 taking bank loans for a flat in Parsvnath’s ‘Exotica’ project in Gurugram The developer had assured that the flat would be handed over by October 2009 but failed to do so.

34. RERA - REAL EXAMPLE (cont.) Around 27,000 projects across the country have been registered under the Real Estate (Regulation and Development) Act, according to the data from the Forum for People’s Collective Efforts (FPCE).  Approximately, 17,000 applications for registration of agents have been received by various authorities, data showed. MP Real Estate Regulatory Authority has sent notices to over 300 promoters/builders for failing to update the status of their respective projects on RERA website.  In Bengaluru as many as 542 ongoing real estate projects are facing uncertainty with the Real Estate Regulatory Authority Karnataka (RERA-K) issuing a notification prohibiting projects with provisional approval from doing business.

35. RERA - REAL EXAMPLE (cont.) Of the total number of projects registered Nearly 18,000 are in Maharashtra 2,350 in Uttar Pradesh more than 1,600 each in Gujarat and Madhya Pradesh. Karnataka has registered around 1,000 projects. Haryana has registered around 400 projects.

36. “RERA to boost redevelopment, Slum Rehab Schemes”

37. CONCLUSION The unsold inventories in resale and new projects have risen up. Newly launched schemes have also been affected because developers are concentrating to complete the projects which are on hand. Despite consumers patiently waiting in order to see fall in prices, in next six months, the improvement and increase in demand is expected to see among middle class housings. In this segment, most consumers are salaried employees and they primarily depend on home loans. With increase in responsibilities and financial discipline, attention will be focused on consumer and developers will have to comply. Informal instruments of the capital will certainly get expired because of pressure from RERA. In addition to this, small and mischievous developers will definitely get confused and caught.

38. CONCLUSION (contD.) Eventually the sector will attract global investors and agencies. There are possibilities for home loan rates to go down further from the current rates and due to this, many home buyers will be part of the real estate schemes. despite of few challenges being experienced in short time, there are enormous long term opportunities hidden in real estate sector due to increased transparency, decrease in interest rates and involvement of affordable agencies’ fund.

39. “Real Estate (Regulation and development) Act (RERA) will bring transparency in real estate sector due to Compliance with the Time Limit of the project, Commitment to the buyers and Cross Halter Misleading Advertising .” THANK YOU

40. reference https://housing.com › Home › Property Trends https://www.merarera.com/ The Gazette of India Part 2 Section 1 Ministry of Law and J ustice (Legislative and Department): THE REAL ESTATE (REGULATION AND DEVLOPMENT) ACT 2016, NEW DELHI, 26 th MARCH 2016, LOK SABHA.