The Real Estate (Regulation & Development) Act, 2016, has come into full force from Monday, with the implementation of Sections 3-19, 40, 59-70, 79 and 80. While the Act had come into force on May 1, 2016, only 69 sections were notified at that time.
Ahead of the Act coming into force, the Ministry of Housing & Urban Poverty Alleviation had formulated and circulated Model Real Estate Regulations for adoption by the Regulatory Authorities in the States/UTs.
Salient features of the Act:
- It regulates transactions between buyers and promoters of residential real estate projects, through establishment of a state level regulatory authorities called Real Estate Regulatory Authorities (RERAs).
- Residential real estate projects, with some exceptions, need to be registered with RERAs. Promoters cannot book or offer these projects for sale without registering them. Real estate agents dealing in these projects also need to register with RERAs.
- On registration, the promoter must upload details of the project on the website of the RERA. These include the site and layout plan, and schedule for completion of the real estate project.
- 70% of the amount collected from buyers for a project must be maintained in a separate bank account and must only be used for construction of that project. The state government can alter this amount to less than 70%.
- It fixes liability on the developers for structural defects for five years.
- Both, developers and buyers, are required to pay the same penal interest of SBI's Marginal Cost of Lending Rate plus 2% in case of delays.
- The Act establishes state level tribunals called Real Estate Appellate Tribunals. Decisions of RERAs can be appealed in these tribunals.
- It prescribed imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.
Chronology of events leading to the Real Estate (Regulation and Development) Act, 2016 coming into force:
-The National Conference of Ministers of Housing, Urban Development and Municipal Affairs of States and UTs held on January 20, 2009 proposed a law for real estate sector;
- During subsequent consultations by the central government, it was decided to enact a central law for real estate sector. This was endorsed by Competition Commission of India, Tariff Commission, Ministry of Consumer Affairs;
- Ministry of Law & Justice suggested central legislation for Real Estate Sector in July, 2011 under specified entries of Concurrent List of the Constitution for regulation of contracts and transfer of property;
- Union Cabinet approved the Real Estate Bill, 2013 on June 4, 2013;
-The Real Estate Bill, 2013 introduced in Rajya Sabha on August 14, 2013;
-Bill was referred to the Department Related Standing Committee on September 23, 2013;
- Report of the Standing Committee tabled in Rajya Sabha on February 13, 2014 and in Lok Sabha on February 17, 2014;
-Attorney General upheld the validity of central legislation for Real Estate Sector and the competence of Parliament on February 9, 2015;
Union Cabinet approved Official Amendments based on Standing Committee Report on April 7, 2015;
-Real Estate Bill, 2013 and Official Amendments referred to the Select Committee of Rajya Sabha on March 6, 2015;
-Select Committee of Rajya Sabha tabled its Report along with Real Estate (R and D) Bill, 2015 on July 30, 2015;
-Union Cabinet approved the Real Estate Bill, 2015 as reported by the Select Committee of Rajya Sabha for further consideration of Parliament on December 9, 2015;
-Bill listed in Rajya Sabha for consideration and passing on 22 and 23 December, 2015 but could not be taken up;
-Bill passed by Rajya Sabha on March 10, 2016; -Lok Sabha passed the Bill on March 15, 2016;
-President of India accorded his assent to the Bill on March 25, 2016;
-The Real Estate (Regulation and Development) Act, 2016 was published in the Gazette for public information on March 26, 2016;
-69 Sections of the Real Estate (Regulation and Development) Act, 2016 notified by the Ministry of Housing & Urban Poverty Alleviation on April 27, 2016 bringing the Act into force with effect from May 1, 2016.
You may read: What to Expect when Expecting Maharashtra Real Estate Rules by Juhilata S. Puntambekar
You may also read: RERA (Real Estate Regulatory Act) – Will Haryana Implement the Right, Earnest, Rare, Approach? by Pramod Minocha