Delhi RERA Decoded

The rules under the Real estate regulatory act for Delhi were notified in November 2017 and are, to a large extent, completely in line with the Central Act. Delhi Development Authority is supervising the implementation of Delhi RERA. Here are the key inclusions of the Act:

  1. All the real estate projects which are under construction and haven’t received occupancy or completion certificate, must be registered with RERA.
  2. The fees for the registration of different projects under Delhi RERA are diverse and are as following –
Area <= 1000 sq mtrs Area > 1000 sq mtrs Maximum Value
Residential Project Rs 5 per sq mtr Rs 10 per sq mtr Rs 5,00,000
Commercial Project Rs 20 per sq mtr Rs 25 per sq mtr Rs 10,00,000
Mixed Project (Residential + Commercial) Rs 10 per sq mtr Rs 15 per sq mtr Rs 7,00,000

 

  1. It is mandatory for the developer who has not received the completion certificate before the commencement of Act to deposit 70% of the sales proceed in a separate bank account
  2. Funds can be proportionally withdrawn from this account according to the completion of the project. The completion stage and amount to be withdrawn should be certified by engineer, architecture and chartered accountant.
  3. Developer has to update the number and types of apartment sold, number of garages sold, status of the project and status of approval within the 15 days expiry of every quarter on the webpage.
  4. The price of the apartment would be based on its carpet area. The carpet area would be re-calculated after the completion. Accordingly, the customer would have to pay or will be refunded, if the carpet area increases (more than 3%) or decreases respectively.
  5. The defect liability for the projects would be 5 years. Hence, developers would be accountable for structural or other type of defects.
  6. The developer will be liable to an imprisonment up to three years and/or payment up to 10% of estimated project cost if he does not act in accordance with the rules and regulation determined by the authority. The same punishment is applicable in case the developer does not conform to the orders and decisions of appellate tribunal.
  7. In the case of default by builder or buyer, interest is applicable for both parties which is equivalent to 2% plus SBI’s MCLR (Marginal Cost of funds based Lending Rate).
  8. Buyer can claim refund of the entire amount with interest, in case the developer fails to complete the project on stipulated time. Developer is liable to pay the amount within 45 days of buyer’s notice.
  9. If the buyer makes a default in payment as per the payment schedule, then interest would be applicable to the unpaid amount. If the default in payment continues, then developer can cancel the registration of the apartment and refund the amount after deducting the appropriate charges.
  10. Penalty in terms of imprisonment up to 1 year and/or payment up to 10% of the estimate cost of apartment or building is applicable to both customer and real estate agent in case they do not obey the orders and decisions of appellate tribunal.
  11. Real Estate agents have to register themselves with the authority and once registered it will be valid for a period of 5 years.
  12. The payment schedule is decided between the consenting parties and followed by them henceforth.

Conclusion

In general, the Delhi RERA is on the same lines as that of the Central Act. It is expected to render transparency as well as trust in the real estate sector. Unlike Maha RERA, which explicitly entails the payment schedule, the Delhi RERA has kept payment schedule at the discretion of the developer and the buyer.

Extent of uncertainties due to Delhi RERA on market determinants such as price, demand and supply is difficult to predict. However, a stable and positive sentiment is expected in the near future.

 

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