Real Estate sector is the one of the fastest growing sector in the India which has 4 major components – Housing, Retail, Hospitality and Commercial where the housing comprises 5-6 percent of India’s GDP. In this sector often project get delays due to lengthy procedures and compliance and hence ultimate buyers get affected. There are not less than thousands of cases where the developers cheats the buyers due to hidden conditions, delay in possession, etc. To regulate the sector it was necessary to have some binding law hence government passed The Real Estate and Regulation Act, 2016.
Real Estate Development and Regulation Act, 2016
This bill was the much awaited bill since 2013, the bill received the assent of the president on 25th March, 2016 and eventually the official gazette of India notified that on 1st May, 2016. Preamble of the Real Estate Development and Regulation Act, 2016 read as under
“An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.”
Registration of Real Estate Project under the Act
As per the Real Estate Development and Regulation Act, 2016 promoter means a person who constructs a building or develops land into projects for sale. If the size of the land proposed is more than 500 Sq. Mt or the number of apartment proposed to be constructed are more than 8 then such project is required to be registered under the act. Further more is any existing project who has not received the completion certificate before the commencement of this act then such projects are required to be registered under the act within the period of 3 months from the applicability of this act.
Following projects are not required to be registered under this act
- Where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases. Government if considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act;
- where the promoter has received completion certificate for a real estate project prior to commencement of this Act;
- for the purpose of renovation or repair or re-development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project.
Documents required for the registration of the project
- A brief details of his enterprise including its name, registered address, type of enterprise (proprietorship, societies, partnership, companies, competent authority), and the particulars of registration, and the names and photographs of the promoter.
- A brief detail of the projects launched by him, in the past five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending.
- Phase thereof, and the whole project as sanctioned by the competent authority.
- The plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy.
- The location details of the project.
- Proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees.
- The number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas apartment with the apartment, if any.
- The number and areas of garage for sale in the project.
- The names and addresses of his real estate agents, if any, for the proposed project.
- The names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project.
and affidavit required to be given stating that,
(A) That he has a legal title to the land on which the development is proposed or with legally valid documents with authentication of such title, if such land is owned by another person.
(B) that the land is free from all encumbrances.
(C) the time period within which he undertakes to complete the project.
(D) 75% of the amounts realised for the real estate project from the allottees, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose:
Promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project.
Amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
The promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such
Compliances by developers
As per Real Estate Development and Regulation Act, 2016 every Promoter has to get his books of accounts audited by chartered accountant within the 6 months from the end financial year i.e. by 30th September every year.
Registration of agents under Real Estate Development and Regulation Act, 2016
As per the Act every agents in the real estate sector is to be registered with the with the authority with applicable fees. Single registration will be granted to agents in one state. As per the act agent can not deal in to projects which are not registered. Agent has to preserve the proper books of accounts as prescribed.
Real Estate Development and Regulation Act, 2016 is said to be encouraging as it will give protection as it will give protection to consumers and developers and ultimately it will be in the interest of the sector. If the process flow of the registration procedure will be easy then it will definitely give the fruitful results.
Read Full Act at http://www.indiacode.nic.in/acts-in-pdf/2016/201616.pdf
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