The Real Estate Regulatory Act, 2016, scheduled to come into effect in Uttar Pradesh from May 1, will safeguard the interests of homebuyers in upcoming realty projects, officials said.
However, it may not help resolve sick projects in Noida, Greater Noida and Yamuna Expressway areas.
Officials said that the Real Estate Regulatory Authority will ensure transparency in new realty projects.
The Act makes it mandatory for each developer to obtain a registration certificate from Real Estate Regulatory Authority (RERA) before selling units in a housing or a commercial project. The developer subsequently, will have to provide details — work experience, finances, projects already delivered, educational qualification, sanctioned map, clearance from the fire department, delivery schedule and other project-related information — on the RERA website.
“For the last six to seven years, we have been asking the authorities to upload details of builders and their realty projects on their websites, so that a buyer can make an informed choice on a property purchase. It would have saved many buyers from getting cheated,” Abhishek Kumar, president of Noida extension flat owners’ welfare association, said.
“Now, RERA will ensure better transparency. A buyer can easily do a background check of a developer and a project online before making an investment,” he said.
Agents under RERA scanner:
As per the Act, an individual property agent or a company working as a real estate consultant will have to get a registration certificate from RERA before setting up a business. The authority will charge an individual a registration fee of Rs5,000 and a company, Rs2.5 lakh.
There have been several cases of cheating of homebuyers by agents in Noida and Greater Noida.
“A property agent will have to provide a copy of his/her PAN card and other professional details before a certificate is issued. RERA will cancel the registration and act against the agent if he/she is proven guilty of violating rules while dealing with a buyer for a property sale,” the Act states.
Buyers in sick projects unhappy:
The Uttar Pradesh Real Estate (Regulation and Development) Rules 2016, notified in November 2016, have classified homebuyers under two categories — buyers in sick realty projects and new buyers who will buy a residential unit in a new project.
“RERA will surely protect homebuyers’ interests in a new realty project, but what will happen to those who have bought flats in older, sick projects? We have suffered for the last four-five years. The RERA also has failed to provide any solution to resolve projects that have been delayed for several years,” SK Nagrath, a retired army official and president of Jaypee Aman homebuyers’ association, said.
“If a builder has completed a project and applied for a completion certificate, it will not come under the ambit of RERA. Only new projects will come under RERA as far as an initial reading of the notification,” Leenu Sehgal, general manager of the Greater Noida authority’s planning department, said.
Many developers in Noida and Greater Noida have applied for a completion certificate despite not completing their projects, to avoid coming under the purview of RERA.
“The UP government has promised to change the rules to ensure that unfinished projects are also included in the Act,” Abhishek Kumar, president of NEFOWA, said. Kumar met UP chief minister Yogi Adityanath to discuss issues pertaining the realty sector in Noida.
Act will not resolve sick projects:
Officials said that the UP government, local authorities and developers have to come together to find a solution for sick realty projects.
“RERA will ensure that a developer whose project is stuck will go to jail, as the law is very stringent. However, sending developers to jail will not solve homebuyers’ problems. The government and developers will have to sit and find solutions project wise. One rule will not work for all projects. RERA will regulate fresh realty projects but old projects cannot be revived under RERA. We have to look for practical solutions,” Amit Modi, director of ABA Corporation and vice-president of the Confederation of Real Estate Developers of India (west UP), said.
The Noida, Greater Noida and Yamuna Expressway authorities are to recover around Rs25,000 crore from builders in land dues. Many realtors have turned defaulters citing a dip in the sale of flats.
In Noida, 86 group housing projects have been delayed by three to four years due to the dip in the realty sector, affecting around one lakh buyers in projects that were to be delivered in 2012. In Greater Noida, around 3.5 lakh homebuyers are yet to get possession of flats that were to be delivered from 2012.
“If old projects come under the ambit if the authority, it will be very detrimental for homebuyers as well as developers,” Anil Mithas, CMD of Unnati Fortune Group, said.
Developers want changes:
Credai members are likely to meet UP chief minister Yogi Adityanath and put forth their suggestions on the act soon.
“To sound populist, the UP government is taking steps to provide a safety net to consumers but the government should also be practical so that developers are not put under unwarranted pressure,” a developer said.
Developers said that a flip side of the Act is that the cost of projects will increase, due to a transition in the realty market. “The cost of flats will increase because developers will have to spend more on each project. Also, developers will now promise delivery in six years instead of the three years, to safeguard themselves,” said Modi.
Developers want government agencies to be covered in the Act, as many times, a project gets delayed due to delay in environmental, fire and other clearances from government bodies, they said.
Also, developers who fail to adhere to the timeline can be jailed for three years if 10% of the project cost is not paid as a compounding charge.
“Why did the government not include government bodies under the ambit of the authority? Many projects in Noida got delayed due to land disputes between the government and the farmer. Many times, getting a building layout map takes long. It would be easier to deliver projects on time if the government agencies are also held responsible,” Modi said.