The Karnataka government has issued notification that the Real Estate Regulatory (Regulation and Development) Act (RERA) will be in effect for all projects – apartments or plots. RERA was approved by the Karnataka Cabinet and the new changes are set to take effect shortly. So what does it all mean for real estate developers and buyers?
Builders will now have to mandatorily register with the regulator. As per the Karnataka RERA rules
- Builders will be declaring carpet area and not saleable area as before which included common areas as well.
- The builders will have to maintain separate bank accounts for each project and all ongoing projects will have to set up accounts and give a detailed documentation for funds received thus far from buyers and expenditure on projects.
- The regulations do not have harsh penal provisions and has done away with imprisonment and has instead chosen a penalty of 10% of the estimated cost of the real estate project.
- In the current state only completed projects and those which have more than 60% of sale deeds executed will be exempt from the Act.
Exemption of Projects
The current objections from buyers are on the exemption of projects. The buyers had objected stating that there is no clear definition of ‘competent authority’ and thus might result in several buyers getting completion certificates without due process.
The partial completion certificate also means that builders need not finish facilities like club houses, roads or even a few building blocks and this has irked buyers as they feel builders will use this loop hole and slip out of the radar of RERA.
The builders association has not raised any objection thus far as the full set of rules are yet to notified to them. But the act in itself it a big leap forward for an industry. That has been largely unorganised.