The Real Estate (Regulation & Development) Act, 2016, the landmark realty law that aims to protect home buyers from deceitful developers came into effect on 1 May 2017. The move ends a nine-year long wait.
The implementation of the act means regulation of the real estate sector, which hosts over 76,000 companies across the country.
• The Real Estate (Regulation and Development) Bill, 2016 was passed by the Parliament in March 2016.
• The act partially came into force in May 2016 with 59 of its 92 notified sections put to force.
• Now, all the 92 sections of the Act have come into effect.
• The states were given the task of notifying to the realty rules and set up a Real Estate Regulatory Authority (RERA) by 30 April 2017, without which the law will not become operational.
• Till now, 13 states and Union Territories including Delhi, Madhya Pradesh, Gujarat, Maharashtra, Odisha, Andhra Pradesh, Uttar Pradesh, Bihar, Daman and Diu have notified the rules.
Speaking on the occasion, M Venkaiah Naidu, the Union Minister of Housing & Urban Poverty Alleviation said that the act marks the beginning of a new era making buyer the King while developers benefit from the confidence of the King in the regulated environment.
He further added that the act brings with it the much-desired transparency, accountability and efficiency in the sector, as it defines the rights and obligations of both the buyers and developers.
Provisions of the Act
• Buyers and developers of real estate property can seek relief by approaching Real Estate Regulatory Authorities against violation of the contractual obligations and other provisions of the Act.
• The act provides for the mandatory registration of projects and real estate agents.
• The act mandates depositing of 70 per cent of the funds collected from buyers in a separate bank account in case of new projects and 70 per cent of unused funds in case of ongoing projects.
• The funds could be withdrawn only for construction purposes.
• It also mandates the registration of projects with a plot size of minimum 500 sqm or 8 apartments with the Regulatory authorities.
• The act also prescribes penalty on developers in case of delay in the project. The developers would be required to disclose the project details on the website of the regulator and provide quarterly updates on construction progress.
• According to the act, the developers would be accountable for any structural defect in the real estate for five years.
• The act also prescribes imprisonment up to three years for developers and up to one year for agents and buyers in case of violation of orders of Appellate Tribunals and Regulatory Authorities.
• The Regulatory authorities would also be required to dispose of complaints in 60 days and Appellate Tribunals would be required to adjudicate cases in 60 days.
Overall, the act would not only enhance consumer confidence but also benefit the sector as a whole, as along with attracting more investments it may also open doors for Foreign Direct Investment (FDI). It will also ensure effective implementation of housing projects such as ‘Housing for All by 2020’ and ‘Smart City’.