Buying a house is no child’s play. It’s a big investment and with big hoardings and advertisements promising self-sufficient apartment complexes and early possession, there’s plenty to choose from.
But the fear of being scammed by builders and real estate agents has many people wary, which is why the center’s decision to notify the Real Estate (Regulation and Development) Act is a welcome move.
In a bid to make real estate transactions more transparent and accountable, the government is set to notify the regulatory legislation which was passed in March. A spokesperson told PTI that the Housing and Urban Poverty Alleviation (HUPA) is set to notify these rules for Union Territories without a legislature within 10 days.
Senior officials from HUPA and the Ministry of Law and Justice are expected to meet on Monday for finalizing the rules.
Here’s how you stand to gain from the Real Estate Act as a buyer:
1. The real estate sector in India is largely unregulated. In case of defaults by the builders, the buyers would have to run pillar to post, from consumer forums to civil courts. The Act stipulates setting up of various bodies like the Central Advisory Council (which will deal with the implementation of the Act and other policy questions), an Appellate Tribunal (to adjudicate cases within 60 days), and a state-level Real Estate Registration Authority (RERA) for registration of all projects.
2. The Act also covers both commercial and residential real estate projects which require land over 500 acres or eight apartments and mandates their registration with RERA.
3. To ensure that builders and promoters actually deliver on the design and plans they woo buyers with, specified in Article 4(2) of the first chapter of the Act are the details of the documents and details they are required to reveal.
These include registered address and details of the promoter, names and addresses of the real estate agents for the project (if any), brief details of the projects launched by the promoter in the last five years and their status (completed or developing), sanctioned plan, layout plan, plan of development, location details with clear demarcation of the land allotted, as well as the carpet area of the apartments for sale.
4. An important distinction the Act makes is between carpet area and super area. The Act mandates that the sale be made in accordance with the former. Advertisement and sale on basis of super area (area in which a flat is spread plus common area such as lobby) will be prohibited. Buyers will only pay for the carpet area – area enclosed within the walls of a flat, including kitchen and toilets – which is the practical area under use.
5. To safeguard the investment made by buyers, the Act stipulates that 70% of the amount paid by them be kept aside in a separate account by the developers. These funds can only be used for construction purposes and the developers are not allowed to invest this money in any other projects.
6. In case the deadline given by the builder is not met and delayed, the buyers are entitled to a certain amount of interest from the builders – the idea here is to compensate for the interest that buyers are paying on home loans, according to a report in The New Indian Express.
8. To further ensure that buyers get what they signed up for, the builder cannot make any major changes (like “addition to the area or change in height, or the removal of part of a building, or any change to the structure, such as the construction or removal or cutting into of any wall or a part of a wall”…) in “the sanctioned plans, layout plans and specifications of the buildings or the common areas” without written permission of at least two-thirds of the buyers, other than a promoter.
9. The Act also ensures that builders do not simply wash off responsibility after possession. “Structural” or “workmanship” defects and the lack of quality of provisions as highlighted in the terms of sale – if any of these is pointed out by the buyer to the promoter within five years of possession, the promoter is bound to rectify the errors within 30 days of the complaint and without extra charge. If he fails to do so, appropriate compensation must be paid to the buyer under the Act.
10. The Act also postulates punishment for builders and promoters who flout the norms outlined in the Act. Those who fail to register their projects will have to pay 10% of project cost as penalty, and repeat offenders could face jail term as well: up to three years for builders and one year for real estate agents.