RERA or The Real Estate (Regulation Development) Act, 2016 has come into effect from May 1.
RERA or The Real Estate (Regulation Development) Act, 2016 has come into effect from today. The Act would regulate the real estate sector that involves over 76,000 companies and is expected to trigger a “new era” of transparency and efficiency for both the buyers and developers.
In a series of tweets on Sunday, Venkaiah Naidu, Union Minister of Housing and Urban Poverty Alleviation said: “Real Estate Act coming into force after a nine-year wait marks the beginning of a new era making buyer the King while developers benefit from the confidence of the King in the regulated environment. Prime Minister Shri Narendra Modi’s personal interest in the matter made the Act a reality now. The Act ushers in the much desired accountability, transparency and efficiency in the sector with the Act defining the rights and obligations of both the buyers and developers. This important legislation gained momentum under this Government and could see the light finally”.”
The Real Estate Act 2017 has several significant provisions for the benefit of buyers and ensuring transparency in the sector. Some of these important provisions are:
- Deposits: Builders are required to deposit 70 per cent of the funds collected from buyers in a separate bank account in case of new projects and 70 per cent of unused funds in case of ongoing projects.
- Mandatory registration: All projects with plot size of minimum 500 sq.mt or eight apartments need to be registered with Regulatory Authorities.
- Penal interests in case of delay: Both developers and buyers have to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays.
- Liability: Liability of developers for structural defects for five years.
- Punishment: 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.
The Real Estate Act has come into effect after nine years of wait. Here is the timeline.
May 2008: Ministry of HUPA (Ministry of Housing and Urban Poverty Alleviation) prepares a concept paper on regulation of real estate sector and a model law for legislation by States/Union Territories
2011: Conference of Ministers of Housing in 2011 suggests a central law for the regulation of real estate sector.
July 2011: Ministry of Law and Justice suggests central legislation for regulation
June 2013: Union Cabinet approves Real Estate Bill, 2013.
August 2013: Real Estate Bill introduced in Rajya Sabha and referred to Standing Committee
February 2014: Report of Standing Committee laid on the Tables of both Houses of Parliament
February 2014: Attorney General upholds validity of central law for regulation of the Real Estate sector
April 2015: Union Cabinet approves official amendments based on recommendations of Standing Committee
May 2015: Matter referred to the Select Committee of Rajya Sabha.
July, 2015: Report of Select Committee tabled in Rajya Sabha
December 2015: Real Estate Bill, 2015 incorporating several modifications based on Select Committee report and stakeholder consultations approved by the Union Cabinet
March 10, 2016: Rajya Sabha passes The Real Estate (Regulation & Development) Bill, 2016.
March 15, 2016: Lok Sabha passes the Bill as passed by Rajya Sabha.
March 25, 2016: President gives assent to the Bill.
April 26, 2016: 59 Sections of the Act notified, making them effective from May 1, 2016, enabling preparation of Real Estate Rules, setting up of Regulatory Authorities and other infrastructure.
April 19, 2017: Remaining 32 Sections of the Act notified, making them effective from May 1, 2017, requiring registration of projects within three months from today.
May 1, 2017: New era begins for the development of real estate sector in an atmosphere of investor confidence.
(With PIB inputs)