NEW DELHI: Homebuyers have raised concerns over the draft real estate rules, saying they fail to protect the interests of those who have booked apartments in the projects that are yet to be completed.
The Parliament in March passed the Real Estate (Regulation and Development) Act to regulate residential and commercial projects and protect the interests of buyers who often complain of delays and cost over runs. The law provides for a regulator, at the Centre as well as in states, to oversee transactions and settle disputes.
Though the law treats all ongoing projects that have not received completion certificate sat par with new ones, the buyers say the draft rules — put out by the housing ministry to seek public response — are unclear on what is required of developers. The rules will be notified by October 31.
It is mandatory for developers to set aside 70% of the money collected from buyers in a separate account and use that solely for funding the construction of the project. But the draft rules do not say how this provision will apply to ongoing projects where developers have already collected 60-70% of the money.
“Because the rule is so vague, a developer will easily get away by depositing 70% of the remaining cost. We have demanded that the developer deposit 70% of the unspent money collected from buyers in an escrow account,” said Abhay Upadhyay, national convener, Fight for RERA (real estate regulatory authority).
{{/usCountry}}“Because the rule is so vague, a developer will easily get away by depositing 70% of the remaining cost. We have demanded that the developer deposit 70% of the unspent money collected from buyers in an escrow account,” said Abhay Upadhyay, national convener, Fight for RERA (real estate regulatory authority).
{{/usCountry}}While registering a project, a developer has to share all project details and give a time-frame to the regulator. This provision, consumers groups say, can be misused in case of ongoing projects as a developer can set anew deadline and alter the layout. “The rules should specify that for ongoing projects a developer will have to submit the original sanction plan and the time frame promised at the time of booking along with subsequent changed plans,” Upadhyay said. It would ensure that a developer is penalised for delays.
Developers, on the other hand, are of the view that laws don’t work retrospectively. “What happens where developers of ongoing project have used all the money collected from buyers on meeting the land cost, getting various approvals and construction cost? If these clauses are added, it will further delay the project,” said Geetamber Anand, president, Confederation of Real Estate Developers’ Association of India.
The housing and poverty alleviation ministry, which is finalising the rules, has so far received 450 representations from buyers association and developers. “We are going through them and will take a final call soon,” an official said.