Promising to safeguard the right of homebuyers and to bring in more transparency, the much-awaited Real Estate Act is set to come into force from Monday. However, only 13 states and UTs have so far notified rules under the Act.
The union urban development minister M Venkaiah Naidu said the law will make “buyer the king”, while developers will also benefit from the increased buyers’ confidence in the regulated environment.
The Real Estate (Regulation and Development) Bill, 2016, (RERA Act), was passed by Parliament in March last year and all the 92 sections of the Act comes into effect from 1 May.
“The Real Estate Act coming into force after a nine-year wait and marks the beginning of a new era,” Naidu said.
Once the Act comes into force, the developers will have to get the ongoing projects that have not received completion certificate and the new projects registered with regulatory authorities within 3 months from Monday.
Under the rules, it is mandatory for the states and UTs to set up the authority. However, officials claimed only 13 states and UTs have so far notified the rules. The states that have notified the rules are Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Maharasthra, Madhya Pradesh and Bihar.
The housing ministry had last year notified the rules for five UTs—Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep, while the urban development ministry came out with such rules for the National Capital Region of Delhi. The other states and UTs will have to come out with their own rules.
A senior official said the ministry has been taking up the matter with all the states and UTs for implementation of the Act, requesting them to ensure action as per the provision of the Act within the time limit.
On reports that key provisions have been diluted by some states, officials said it was pointed out to those states and they have assured the ministry that it would be corrected.
Some of the major provisions of the Act, besides mandatory registration of projects and Real Estate Agents include:
1.Depositing 70% of the funds collected from buyers in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects;
2. Projects with plot size of minimum 500 sq.mt or 8 apartments shall be registered with Regulatory Authorities;
3.Both developers and buyers to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays;
4.Liability of developers for structural defects for five years
5. Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.