Karnataka Stands Top Rank in RERA Act

Karnataka is one of the first Indian States in notifying the Real Estate Regulatory (Regulation and Development) Act, 2016 immediately after the Act came into force on May 1, 2017. Kapil Mohan, Principal Secretary, Department of Housing, Government of Karnataka, shares the details of the Karnataka Real Estate Regulatory Authority (RERA), experiences and future roadmap, in an interview with T Radhakrishna of Elets News Network (ENN).

The State Governments are liable to notify the Rules under the Act within a statutory period of six months. Give us an overview of Karnataka RERA.

The Karnataka RERA has been established as per Section 1 of the RERA 2016. As per the Section 3 of the Act, all promoters ought to have got registered their ongoing real estate projects (housing and commercial) with this authority on or before July 31, 2017. The Government of Karnataka notified the Karnataka RERA on July 10, 2017 and launched the web site (rera.karnataka.gov.in) on the same day for facilitating online registration. Over 800 real estate projects out of approximately 4,000 were registered with the Karnataka RERA before its deadline. The Government asked promoters / developers who have failed to register their respective ongoing project/s to comply with the Act on or before August 31, 2017.

What are the key features of the Act?

Registration: The Real Estate Act makes it mandatory for all commercial and residential real estate projects where the land is over 500 square metres, or 8 apartments, to register with the RERA for launching a project, to provide greater transparency in project-marketing and execution. For ongoing projects, which have not received completion certificate on the date of commencement of the Act, they will have to seek registration within three months. Application for registration must be either approved or rejected within 30 days from the date of application by the RERA. On successful registration, the promoter of the project will be provided with a registration number, a login ID, and password for the applicants to fill up essential details on the website of the RERA.

For failure to register, a penalty of up to 10 percent of the project cost or three years’ imprisonment may be imposed. Real estate agents, who facilitate selling or purchase of properties, must take prior registration from RERA. Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by the agent in every sale facilitated by him.

Protection of buyers: The Act prohibits unaccounted money from being pumped into the sector and as of now 70 per cent of the money has to be deposited in bank accounts through cheques. A major benefit for consumers included in the Act is that builders will have to quote prices based on carpet area not super built-up area, while carpet area has been clearly defined in the Act to include usable spaces like kitchen and toilets.

RERA and Appellate Tribunal: It will help to establish state-level Real Estate Regulatory Authorities (RERAs) to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover. Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days and Regulatory Authorities to dispose of complaints in 60 days while no time frame was indicated in earlier Bill.

How RERA will benefit builders?

The builders will also benefit from the RERA, as it proposes to impose penalty on allottee for not paying dues on time. Also, the builder will have the opportunity to approach the regulator in case there is any issue with the buyer.

What is the impact of RERA in general?

The share of affordable segment in total launches has improved. While sales have been weak across segments, it has been prominent in the high-end and luxury segments over the last quarters owing to demand-supply mismatches

Under RERA, all property brokers will have to register with real estate regulators in their states, thus sieving out the small-time players and consolidating major ones

Now, according to new order issued by the RERA, developers can’t delete documents once uploaded on the website. Developers now will have to be extra careful while uploading any documents for registration, as the new orders from the RERA says that documents once uploaded by the promoter during registration or project update cannot be deleted. RERA, as also said that, if the developer fails to update the progress in the project, action will be taken too.

Where does Karnataka stand in RERA?

Karnataka stands top 3 rank in RERA though there is no official study yet on this ranking. We are one of the first states in notifying the RERA in the country.

Status on RERA: As of August 5, 2017, States like Goa, Kerala, West Bengal, Jharkhand, Assam has not notified the Rules.