The Real Estate Regulation Act kicks in from today, but only 13 states and UTs have notified rules
Union minister Venkaiah Naidu has clarified that the law only seeks to regulate the sector ‘for the benefit of all’, not ‘strangulate’ it.
The Real Estate (Regulation and Development) Act comes into force from Monday. The law, which has been dubbed “Rera”, was passed in March last year with promises to bring about transparency, accountability, and efficiency in the real estate sector and also protect genuine home buyers.
However, only 13 states and Union Territories have ratified Rera so far. These are Uttar Pradesh, Rajasthan, Gujarat, Odisha, Andhra Pradesh, Maharashtra, Madhya Pradesh and Bihar. The Housing Ministry had earlier notified the rules for the Union Territories of Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep.
Rera is a model law, which means it is up to the states to draft and pass their own laws according to the guidelines, as land is a state subject. The Centre had asked all states to notify the Act before 30 April. All real estate developers and agents are to register with their respective state regulatory authorities by July 30.
Of the eight states that have framed rules under the Act, only three – Maharashtra, Rajasthan and Madhya Pradesh – have appointed a housing regulator. Also, only Maharashtra has set up a website on which real estate agents can register themselves.
Minister for Urban Development, Housing and Urban Poverty Alleviation Venkaiah Naidu on Sunday said, “I am happy that the hard labour put in by the Narendra Modi-led government to make this Act a reality fructifies on May Day. This is a landmark legislation becoming a reality nine years after the regulation of real estate sector was first mooted in 2008.”
Naidu clarified that the law will only regulate the sector “for the benefit of all”, not “strangulate” it.. “I only insist that developers fulfil their promises...simply adhere to the promises made in the advertisement.”
Under the Act, developers will now have to get new projects, as well as ongoing projects that have not received a completion certificate, registered with regulatory authorities within three months from Monday. Besides mandatory registration of projects and real estate agents, the Act also directs developers to deposit 70% of the funds collected from buyers in a separate bank account for construction of the project. This, the Act says, will ensure projects’ timely completion as funds can be withdrawn only for construction purposes.
The law also prescribes penalties on developers who delay projects. All developers are required to disclose details of their undertakings on the regulator’s website and provide quarterly updates on their progress. In case of delays, the onus of paying the monthly interest on bank loans taken for flats being built will lie on developers unlike earlier, when the burden fell on home buyers.