There is good news for home buyers in Delhi.
The Union urban development (UD) ministry on Wednesday finalised the rules to make the landmark Real Estate (Regulation and Development) Act operational in the national capital. The law will not only protect new homebuyers from unscrupulous developers but safeguard the interest of allottees of the ongoing projects.
The Parliament had cleared the realty law in March and states and union territories were given six months to notify the rules. While for Delhi, the UD ministry will notify the rules, the housing and urban poverty alleviation ministry (HUPA) had on October 31 completed the process for five Union Territories that it administers. States have to frame their own rules based on the Central law. So far, only Uttar Pradesh and Gujarat have notified the rules.
“We will notify the rules for Delhi before November 27, the deadline set by the Centre,” said a senior UD ministry official.
However, as of now only some of the provisions of the realty law will become operational. The full Act will come into force from May 1, 2017 when the regulatory authority is set up in each state and Union Territory.
For the interim period, vice-chairman of the Delhi Development Authority has been designated as the real estate regulator. The realty act empowers the appropriate government to designate any officer as regulatory authority till a full fledged one is established.
Some of the important provisions in the Delhi rules that has been finalized are:
The rules have cleared the opacity around ongoing projects that have not received completion certificate till now. While registering with the regulator, developers of all such project will not only have to make public the original sanctioned plans with specifications and changes made later but also the total amount collected from allottees and the money that has been used already.
Besides, within three months of applying for registration of a project the developer will also have to deposit 70% of the amount collected that has not been used in a separate bank account for ensuring completion of such ongoing projects.
Registration of projects
To incentivise developers to get their project registered with the realty regulator, the Centre has reduced the fee by half. The fee has been reduced to Rs 5 per sqm for up to 1,000 sq.mt area and Rs 10 per sqm beyond this limit subject to a maximum of Rs 50 lakh per project.
Interest to be paid in case of default
In case of default, promoter and allottee will have to repay with same rate of interest, which will be higher by two per cent of the SBI’s benchmark interest rate.
The realty law makes it mandatory for all such builders -- developing a project where the land exceeds 500 square metre -- to register themselves with the regulatory authority before launching or even advertising their project Failure to do so will invite a penalty of up to 10% of the project cost. For subsequent violation, developers will land up in jail for three years.
The rules also provide for regulatory authorities to undertake third party quality audit of real estate projects registered with them, to ensure quality of construction, services etc., of the project in the interest of buyers.