Presentation on RERA

1. Real Estate Regulation Act 2016
Impact of the Act on construction Industry

2. Introduction
• Real Estate (Regulation & Development) Act, 2016 aims to establish the Real Estate
Regulatory Authority that would regulate and promote the real estate sector.
• The scope of Real Estate Regulatory Authority are as follows –
1. Ensure the sale of land or building or a project in an efficient and transparent manner
2. Protect the interest of consumers
3. Establish a mechanism to ensure speedy redressal of disputes
4. Establish an Appellate Tribunal
5. Cover both residential and commercial projects
• The Real Estate (Regulation & Development) Act, 2016 shall have an overriding effect over any
other state act.

3. Registration
• Projects which require registration :
1. The promoter has to register the project(commercial or residential), with the regulatory Authority before
booking, selling, or offering apartment for sale in projects. In case the project is promoted in phase each
phase has to be registered.
2. In case of ongoing projects on the date of commencement of the Act which have not received a
completion certificate, the promoter of such project shall make an application to the Regulatory
Authority for registration of their project within a period of three months of the commencement of the
Act.
• Project which does not require registration :
1. Where the land proposed to be promoted does not exceed 500 square meters or number of apartments
to be constructed in the project does not exceed eight apartments. This provisos can be changed by the
appropriate government
2. Where Completion Certificate has been received before commencement of this Act.
3. Project for the purpose of renovation or repair or redevelopment , which does not require marketing,
advertising, selling and new allotment of any apartment plot or building.

4. Registration
The application for registration must disclose the following information:
a. Details of the promoter (such as its registered address, type of enterprise such proprietorship, societies,
partnership, companies, competent authority);
b. A brief detail of the projects launched by the promoter, in the past five years, whether already completed or
being developed, as the case may be, including the current status of the projects, any delay in its completion,
details of cases pending, details of type of land and payments pending;
c. An authenticated copy of the approval and commencement certificate received from the competent authority
and where the project is proposed to be developed in phases, an authenticated copy of the approval and
commencement certificate of each of such phases;
d. The sanctioned plan, layout plan and specifications of the project, plan of development works to be executed in
the proposed project and the proposed facilities to be provided thereof and the locational details of the project;
e. Proforma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with the
allottees;
f. Number, type and carpet area of the apartments and the number and areas of garages for sale in the project;
g. The names and addresses of the promoter's real estate agents, if any, and contractors, architects, structural
engineers affiliated with the project; and
h. A declaration by the promoter supported by an affidavit stating that:
– he has a legal title to the land, free from all encumbrances, and in case there is an encumbrance, then
details of such encumbrances on the land including any right, title, interest or name of any party in or
over such land along with the details;
– the time period within which he undertakes to complete the project or the phase; and
– 70% of the amounts realized for the real estate project from the allottees, from time to time, shall be
deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction
and the land cost and shall be used only for that purpose.

5. Registration
• Refusal or Grant
 On receipt of application for registration the Authority may either accept or refuse the registration within
30 days
 If the registration is granted, then RERA shall provide registration number ,including Login id and
password to the applicant to access the website of the Authority and create his web page and fill in the
details of the project
 No registration can be rejected without giving an opportunity of being heard to the applicant.
 If the application is neither rejected nor accepted within 30days time, the application shall be deemed to
be granted registration.
 Registration shall be valid for the duration of time as mentioned by the Promoter in the application, the
time in which the project is to be completed. A registration may be extended by an application from the
Promoter for reasons of force majeure.
• Revocation of registration:
In the event the registration is revoked by the Regulatory Authority or it lapses, the Regulatory Authority shall:
1. Shall debar the Promoter from accessing the Authority’s website in relation to the project and the
name of the Promoter shall be added to the list of defaulters along with his photograph on the website.
Other State RERAs shall be intimated of such revocation.
2. Shall facilitate the remaining development works to be carried out as per the decision taken by it,
which may include carrying out of the remaining development works by competent authority or by the
association of allottees.
3. Shall direct the bank holding the project bank account to freeze it, and thereafter may direct the bank
to de-freeze it for the purposes of facilitating the completion of the project.
4. Or any other act, as it may deem necessary.

6. Real Estate Regulation Authority(RERA)
• The Real Estate Regulatory Authority (RERA) will come into existence one year from the date of
commencement of the act, by a notification, which will be issued by the appropriate government.
• The Government or Governments, as the case may be, have the discretion of establishing just
one RERA for two or more states, or establish more than one RERA in a single state.
• The Government can appoint any authority to carry out the functions of a RERA for as long as
the RERA is not established. As soon as the RERA is established, all the cases would be
transferred from the authority acting as RERA to the established RERA.
• RERA shall be a body corporate.
• Powers of RERA
1. To impose penalty or interest on Promoter/Allottee/Agent in regard of any contravention of
obligations.
2. To regulate its own procedure.
3. To suo motu make reference to Competition Commission of India of any matter that has effect of
market power of monopoly situation being abused for adversely affecting the interest of allottees.
4. To, suo motu or upon a complaint, call upon Promoter/Allottee/Agent at any time and order to furnish
in writing information or explanation.
5. Authority may appoint one or more persons to investigate and inquire in relation to the affairs of
Promoter/Allottee/Agent.

7. Real Estate Appellate Tribunal
• The bill proposes to establish a Real Estate Appellate Tribunal which shall come into force within
one year from date of commencement of the Act.
• Any person aggrieved by the decision or order of the Regulatory Authority or by the adjudicating
officer, may make an appeal to the Real Estate Appellate Tribunal within 60 days from the date of
receipt of a copy of order or directions.
• The Appellate Tribunal shall deal with the appeal expeditiously and shall dispose have the appeal
within 60 days from date of receipt of appeal.
• The Tribunal has the jurisdiction similar to that of a civil court and shall be deemed to be a civil
court. An appeal against the order of the Appellate Tribunal may be filed with the High Court,
within 60 days from the date of communication of decision or order of the Appellate Tribunal

8. Penalties
RERA provides stringent provisions with respect to contravention or non- compliance of the provisions the
Act or orders, decisions or directions of the Regulatory Authority or the Appellate
Tribunal which are as follows :
1. If promoter does not register its project with the Regulatory Authority – the penalty may be up to
10% of the estimated cost of the project as determined by the Regulatory Authority;
2. If promoter does not comply with the aforesaid order of the Regulatory Authority -
imprisonment of up to three years and a further penalty of up to 10% of the estimated cost, or
both; and
3. In case the promoter provides any false information while making an application to the Regulatory
Authority or contravenes any other provision of the Act – the penalty may be up to 5% of the
estimated cost of the project or construction.
Penalties with respect to Real Estate Agents
– If any allottee fails to comply with, or contravenes any of the orders, decisions or directions of the
Regularity Authority, there may be a penalty for the period during which such default continues, which
may cumulatively extend up to 5% of the cost of the plot, apartment or building, as the case may be, as
determined by the Regulatory Authority. Further, if any allottee fails to comply with, or contravenes any
of the orders or directions of the Appellate Tribunal, this may entail imprisonment up to one year or
with fine for every day during which such default continues, which may cumulatively extend up to 10%
of the cost of the plot, apartment or building, as the case may be, or with both.

9. Duties of Developer
The Developer has the following duties under RERA :
1. Developers have to disclose project related details, including project plan, layout, and government
approvals related information to the customers such as sanctioned floor space index (FSI), the number of
buildings and wings, the number of floors in each building, etc.
2. Any structural defect, or any other obligations of the promoter as per the agreement for sale, brought to
notice of promoter within five years from possession to be rectified free of cost. It is sort of 5-year
manufacturing guarantee
3. Once a project has been registered the progress detail needs to be updated on RERA website on a quarterly
basis. So don’t drive on weekends with family to the site where you have purchased a flat to check the
progress.
4. Builder can be held accountable for delays and compensation will be paid as per markets linked rates. It is
fixed at 2% above SBI’s lending rates (currently it is around 10%). The builder has to give the new date of
project completion with the compensation.
5. Builder need to keep 70% of the funds in one escrow account opened in the name of the project. He
cannot invest one projects money in another thereby causing a delay in the projects. If money is siphoned
and builder is caught, he can be heavily penalized and jailed (max 3 years) too (the penalty clause are
different for each state). So expect more discipline in project completion on time.
6. A consent of 2/3rd of the buyers is required for any major structural or amenities change.
7. The builder needs to tell and quote the price in CARPET AREA you are buying. No other units like built-
up, super built-up, PFS etc. is allowed. This is done to bring uniformity in price terms used by builders

10. Impact of RERA on Developers
1. On going projects :
Major impact of RERA is on the ongoing project,, and thus it will increase the cost as well as cause
delay projects but it will also create a lot of issues. The Acts should be applicable prospectively and not
retrospectively, as the Act not only affects the new projects but also various projects at various stages which
indeed shall lead to delayed deliveries of the projects.
2. Delays and Cost Escalations :
The major delays and cost escalations are created not by the developers but by the various
governmental authorities which sanction requisite projects and monitor during the course of development as it
takes 12 to 18 months for approval. It takes time even to get the OC and various other formalities.
3. Cost of Developers will increase:
The cost of developers will increase as sales can only happen post registration which is possible only
post approvals. The benefits which the consumers received before when they bought the property at reasonable
price could not be received now. With higher holding costs, the costs will further increase and the cost shall be
transferred to the consumers. Thus, increasing the price.
4. Cost for consumer shall increase :
With RERA, there shall be consolidation in the market an hence there shall be fewer sellers which
would increase the consumer competition in the market. Competition usually keeps the price under control
and due to reduction in the number of developers the consumers shall have less choice to choose out of.
5. Refund not justified:
The provisions with respect to 60days refund is unjustified as the developers need not have enough
sum with him all the time. All money which has been invested in construction and incase of cancellations the
developer has to refund all the money so invested to the consumer within 60 days which is not possible. A
delay by few customers shall affect the whole project and the developer has to refund the money to all
customers which shall affect the developers.

11. Impact on Consumers
• The unregularised real estate industry has now been regulated under the RERA, this will help the
consumer have an opportunity to file grievance against authorities formed under this Act.
• Consumers have to pay the real estate property at carpet area and not at the built up or super
built up area.
• The consumers can now get the benefit of making the developers liable for making good any
defects arising in the property within 5 years from transfer of possession of the property
• Developer will have to put 70% of the money collected from a buyer in a separate account to
meet the construction cost of the project. States can increase the ceiling but not lower it. This will
put a check to the general practice by majority of the developers to divert buyer’s money to start
new project instead of finishing the one for which money was collected. This will ensure that
construction is completed on time.
• It is likely to stabilize housing prices. The bill will lead to enhanced activity in the sector, leading to
more housing units supplied to the market. In the government’s opinion, the bill will bring in the
much-needed confidence to infuse more investment and, in turn, stabilize house prices.
• The bill also seeks to impose strict regulations on the promoter and ensure that construction is
completed on time. Its purpose is to ensure that the buyer gets the property as per the
specifications that he had been promised
• Real estate appellate tribunals now required to adjudicate cases in 60 days as against 90 days in the
earlier proposal. Regulatory Authorities to dispose of complaints in 60 days while no such time
limit was indicated earlier.

12. Other Provions of RERA
• Appropriate Government may by notification supersede the Authority for a period not exceeding
six months if it is of the opinion that RERA for reasons beyond its control is unable to perform
its functions and duties, or that the Authority has persistently defaulted in complying with
directions given by the government or by default in performance of functions has led to financial
position of the Authority to suffer, or that it becomes necessary for public interest.
• Within 6 months of enactment, state government shall make rules for carrying out provisions of
the Act.
• RERA within 3 months of its establishment shall make rules for carrying out provisions of the
Act
• Penalties on Allottees:
1. Liable to a penalty for the period during which such default continues, which may cumulatively extend up
to 5% of the apartment.
2. Punishable with imprisonment for a term which may extend up to 1 year or with fine for every day during
which such default continues, which may cumulatively extend up 10% of the apartment.

13. Conclusion
• Real Estate (Regulation & Development) Act bring about transparency and accountability in the
real estate sector by providing mechanism to facilitate and regulate sale and purchase of
commercial and residential units/projects and timely completion of projects by the promoters.
• The Act has put responsibility on the Government to make Regulatory Authority within the time
limit of one year.

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