The Uttar Pradesh government has changed the definition of an “ongoing project”, which removes builders from the scope of the Real Estate Regulation Act, The Financial Express reported.
This means that developers – even those who have applied for a licence under the legislation or received a certificate on a project’s partial completion before the Act came into force – cannot be penalised under it for not completing projects or abandoning home buyers.
Under the Rera, builders have to register new as well as ongoing projects that have not received a completion certificate with regulatory authorities. The law also prescribes penalties on developers who delay projects.
The state government has also amended clauses related to fining developers for not complying with the Act. The Rera notified by the Centre recommended up to three years in jail, or a fine of up to 10% of the estimated cost of the real estate project, or both. The UP government has brought in a compounding clause and also reduced this to up to 10% of the cost of the project.
Besides mandatory registration for real estate agents, as well, the Act also directs developers to deposit 70% of the funds collected from buyers in a separate bank account for the project to ensure their ’ timely completion. These funds can be withdrawn only for the construction.
The previous Samajwadi Party government in Uttar Prdesh had notified the real estate law in October 2016.