The new draft of the rules of the Real Estate Development and Regulation Act 2016, formulated by the housing and urban poverty alleviation ministry has the following
- Developers to pay 11.2 per cent interest to buyers for delay in handing over apartments and homes.
- Projects without completion certificate will have to register with the RE Regulatory Authority in their respective states within three months of the rules being notified.
- Builders have to give completion date of a project, size of flats, promised facilities.
- Any changes in layout and construction, size of the apartment, additions in towers and delays should have consent from 70 per cent of the allottees.
- The RE Act states that in the absence of the consent, the authority can take a decision of get the project completed by an external agency with the buyers’ consent.
The draft rules will seek public comments till July 8.
The interest rate compensation has been proposed to be 2 percentage points over and above the prime lending rate (PLR) of State Bank of India. Normally, a home loan from SBI is pegged at 0.20 percentage points to 0.80 percentage points over and above the MCLR (marginal cost of fund based lending rate) at 9.15 per cent, which is the PLR for a retail loan. That means, rates for compensation would be 11.2 per cent as against the home loan rate of 9.35 per cent to 9.95 per cent.
The draft rules provided a “compounding” fine that builders can pay to escape imprisonment if they violate a ruling by the regulator. Developers said if the rules are applied on ongoing projects the sector will be hit severely and there could be further delay. President of the Confederation of Real Estate Developers’ Associations of India said all unfinished projects, which were launched before 2012, can be termed as defaulters and under the draft rules, if buyers demand their money back, developers will have to return at over 11 per cent rate of interest.
As real estate is a state subject, each state has to frame its own rules on the basis of the regulation approved in their respective assemblies. The state governments will have to frame their own rules within six months of May 1, when the Act was notified. The rules will come as a great relief to home buyers as this would be a step towards forcing developers to complete projects as soon as possible.