After a few months’ delay the Goa government has finally uploaded draft Real Estate (Regulation and Development) rules and invited suggestions from the public over the next ten days. Once the final rules are notified they are expected to establish a system by which builders, real estate agents and brokers would be bound by their commitments, such as on apartment delivery dates. The legislation is aimed at protecting the interests of home buyers. New buyers will get support from the fact that they will deal only with registered builders and real estate agents. Builders have to register themselves and their projects with the Real Estate Regulation Authority (RERA). The draft rules seek to bring transparency in the pricing of property sold to buyers as builders have to give break-up of the costing of the project – price of land, cost of construction, materials, etc. The rules once notified after taking into consideration public suggestions will prevent wrong practices of builders and real estate agents who had full scope to deny home buyers their legitimate rights under one guise or another.
The rules require builders and real estate agents to register their ongoing projects with RERA. Every builder will have to provide details of projects being developed by them, such as details about land ownership, title of land, design or layout, number of buildings and FAR so as to be eligible for registration under the RERA rules. The draft rules also provide for means to address the issue of diversion of funds and consequent delay in project completion. The builders can use the funds raised on a project only for that particular project and would not be allowed to divert any amount for any other project. Besides, 70 per cent of the funds received from potential home buyers have to be deposited in a separate bank account. Fund use is to be monitored by chartered accountants. Real estate agents will have to provide details of income tax returns, apart from their registered addresses. Besides, they must not have criminal background. The agents can register themselves as individuals or corporate entities. To ensure fairness in registration no agent’s application for registration will be rejected unless heard by the RERA.
While the central act came into effect on May 1 this year, Goa failed to implement it promptly, mainly due to failure of the authorities to frame the rules in time. Elsewhere in the country builders were directed to register with the authority by July 31; in Goa the date had to be extended until October. Strangely, the government called for registration of the builders, promoters and others under the Act even before notifying the rules. Failure to notify the rules resulted in most builders preferring to wait until the government notified the rules so that there was clarity on rules under which they had to operate their businesses. With the extended date for registration expiring in about two months from now, the government has to decide on the suggestions received from the public within a specific time frame and also approve the rules and notify them at the earliest, so that there is no further delay in registration of the builders and real estate agents and the Act is implemented without further delay.
RERA is a blessing for home buyers who henceforth will be protected from being cheated by unscrupulous builders and agents. Strict implementation of the rules will close the doors for fly-by night operators, who have taken quite a good number of people for ride and cheated them of their hard earned money. The cases of diversion of installments collected from buyers for one project to another project by even reputed builders were very common even in big cities such as Delhi and Mumbai. Under the new rules every builder will have to give firm dates for completion of a project. Failure to hand over possession by the promised date will invite penalties. Home buyers will have access to all information submitted to RERA by the builders, barring few exceptions which will help them in cases of disputes. Builders will also have to use appropriate construction materials and construction techniques in accordance with national building codes. The rules will help people plan and pay for affordable and quality houses without suffering for years and years in the denial of delivery by builders. Earlier, sufferers had to seek justice from consumer courts and high courts – sometimes even the Supreme Court – which meant spending of more money on litigation. They have to go to one designated authority, RERA now. Let us hope RERA is able to establish ethical standards in the private housing sector.