Real Estate Rules 2016 (India) : Analysis

By | November 1, 2016
0 Comment
(Last Updated On: November 2, 2016)

Real Estate Rules 2016

Real Estate Rules 2016

Key Points about Real Estate Rules 2016

To incentivize registration of projects and Real Estate Agents with Regulatory Authorities, fee for the same has been reduced by half based on suggestions from promoters for reduction of fee.  For registration of projects, the fee has been reduced to Rs.5 per sq.mt for up to 1,000 sq.mt area and Rs.10 per sq.mt beyond this limit subject to a maximum of Rs.5.00 lakh per project. For commercial and mixed development projects, it will be Rs.10 and Rs.15 per sq.mt subject to a maximum of Rs.7.00 lakh. For commercial projects, it will be Rs.20 and Rs.25 subject to a cap of Rs.10 lakh per project. For plotted development, it is Rs.5 per sq.mt with a ceiling of Rs.2.00 lakhs.

                A cap has been placed on the total amount of registration fee based on the suggestion of real estate bodies.

                Fee for renewing registration of projects with the Regulatory Authorities would be half of the registration fees.

                For registration of Real Estate Agents, fee now prescribed is Rs.10,000 for individuals and Rs.50,000 for other entities as against Rs.25,000 and Rs.2,50,000 proposed in the Draft Rules.

                Similarly, fee for renewal of registration of projects and agents has also been reduced to Rs.5,000 and Rs.25,000 respectively.

  • Real Estate Rules 2016 : Disclosure on Website by Promoter 

 Promoter shall upload on the webpage of the project, within 15 days of expiry of each quarter information regarding number and type of apartments or plots, garages booked, status of the project with photographs floor-wise, status of construction of internal infrastructure and common areas with photos, status of approvals received and expected date of receipt, modifications in sanctioned plans and specifications approved by the competent authority.

 The requirement of disclosing Income Tax returns proposed earlier has been withdrawn in the final  Rules keeping in view the confidentiality attached with them and as pointed out by legal experts and promoters.

  • Real Estate Rules 2016 : Interest to be paid in case of delay

Developers will be required to refund or pay compensation to the allottees with an Interest Rate of SBI’s highest Marginal Cost of Lending Rate plus 2%.

Real Estate Rules 2016 stipulate such payment to the allottee be made within 45 days of it becoming due. This interest applies to payments due to the developers by the allottee which is to be paid within the period to be specified in the Agreement of Sale.

  • Real Estate Rules 2016 : Fee for appeals and complaints:

                    For every appeal to be made to the Real Estate Appellate Tribunal, fee proposed is Rs.5,000. For every complaint to be made to Regulatory Authorities and Adjudicating Officers, fee proposed is Rs.1,000.

  • Real Estate Rules 2016 : Compounding of punishment:

                Rules provide for compounding of punishment with imprisonment for violation of the orders of Real Estate Appellate Tribunal against payment of 10% of project cost in case of developers and 10% of the cost of property purchased in case of allottees and agents. Compliance with reasons for punishment shall be complied within 30 days of compounding.

                In pursuance of the assurance given by Shri M.Venkaiah Naidu, Real Estate Rules prohibit any discrimination in sale of properties on any ground.

                Under the Rules, Adjudicating Officers, Real Estate Authorities and Appellate Tribunals shall dispose of complaints within 60 days.

                To enable informed decisions by buyers, Real Estate Regulatory Authorities shall ensure publication on their websites  information relating to profile and track record of promoters, details of litigations, advertisement and prospectus issued about the project, details of apartments, plots and garages, registered agents and consultants, development plan, financial details of the promoters, status of approvals and projects etc.

                Ministry of Urban Development is working on similar Rules which would be applicable for real estate sector in the National Capital Region of Delhi while the State Governments and other UTs with Legislatures are required to notify Rules for application in respective domains.

                As per the Act, the Real Estate Rules were required to be notified by all the concerned by October 31,2016. In view of the delay in this regard, the Ministry of HUPA has sought time from the Committee on Subordinate Legislature of Rajya Sabha for notifying the Rules.

                With notification of Real Estate Rules by the Ministry of Housing & Urban Poverty Alleviation, States and UTs are expected to do so soon. As per the provisions of the Real Estate (Regulation and Development) Act, 2016, Real Estate Regulatory Authorities are required to be put in place by April 30, 2017 before full Act is brought into effect, the next day.

  • Real Estate Rules 2016 : Timely implementation

To ensure timely implementation of real estate projects, the Real Estate (Regulation & Development) Agreement for Sale Rules, 2016 specify in black and white, the rights and obligations of both the promoters and buyers, including the right to terminate the agreement entered into by them in case of default by each other.

Agreement for Sale Rules notified by the Ministry of Housing & Urban Poverty Alleviation notified on October 31, 2016 seeks to eliminate the scope of such agreements being in favour of either of the parties. These Rules are applicable to the Union Territories of Andaman & Nicobar Islands, Dadra and Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh.

Underlining that timely execution of project is the essence of the Agreement to be entered in to, the Rules define the role and responsibilities of both buyers and promoters.

  • Real Estate Rules 2016 : Agreement Specified

Under these Rules, a 20-page Agreement has been specified in which the date of delivery of possession to buyer is to be clearly mentioned and a schedule of payment as agreed upon by both parties is to be enclosed. Violation of these commitments is to be treated as default, in which case, promoter and buyer can terminate the agreement.

The Rules provide for amending the agreement with written consent of both the parties.

  • Real Estate Rules 2016 : Termination of Agreement by Promoter

If the buyer defaults by not paying to the promoter for a specified number of demands made by promoter and such a default persists for an agreed upon number of months, promoter can terminate the agreement and cancel the allotment made to buyer. Promoter, can then deduct the booking amount and interest liabilities from the amount to be repaid to buyer.

  • Real Estate Rules 2016 : Termination of Agreement by Buyer

If promote fails to give ready to move in possession of the apartment or fails to complete the project as per the stipulated time, amounting to default, buyer can then terminate the agreement and is entitled to refund of amount paid with interest in 45 days of such termination. In case, the buyer does not want to withdraw from such a delayed project, he needs to be paid interest till the project is completed. This however, does not apply if the development of project is delayed by force majeure conditions like war, floods, cyclone, drought, etc., which are beyond the control of promoter.

  • Real Estate Rules 2016 : Escalation free  price of apartment/plot  

The Agreement to be entered into stipulates that the total price of apartment/plot shall be escalation free except when development charges are increased by the competent authorities.

  • Real Estate Rules 2016  : Rights of promoters

Agreement provides for certain rights of promoters including timely payments as per the mutually agreed upon payment schedule, interest in case of delay in payments by buyer, additional payments for increase in carpet area up to 3% of corporate area originally offered to buyer and no liability on his part in case of delay in execution of project due to force majeure conditions.

  • Real Estate Rules 2016 : Rights of buyers

The rights of buyers include timely delivery of possession of property by buyer, refund or payment of compensation with interest in case of delays, rectification of structural defects by promoter over a period of five years from the date of issuance of occupancy certificate etc.

  • Real Estate Rules 2016 :  Mandatory Disclosure by Promoter

The Agreement for Sale Rules, notified along with General Rules make it mandatory, disclosure of the number of apartment and the floor allotted to buyer, carpet area, number and the area of garage/covered parking, date of grant of commencement certificate by the competent authority, name of the authority that granted required approvals, Regulatory Authority with which the project is registered and such registration number, break up of cost including the cost of apartment, exclusive balcony or verandah, exclusive open terrace, proportionate cost of common area, preferential location charges, taxes and maintenance charges etc.

  • Real Estate Rules 2016

  • Real Estate Rules 2016

Related Post

 

Leave a Reply

Your email address will not be published.