: Real estate developers will now have to provide additional information to buyers about ongoing projects and deposit 70 per cent of the unused funds in a separate bank account to ensure project completion. These have been stipulated in the Real Estate (Regulation and Development) (General) Rules, 2016 that was notified by the Ministry of Housing and Urban Population on Monday.
The rules will be applicable to five Union Territories without Legislature — Andaman & Nicobar Islands, Dadra and Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh. These rules were required to be notified on October 31, as stipulated in the Real Estate (Regulation & Development) Act, 2016 that was partly brought into effect on May 1 this year.
For Delhi, similar rules have to be notified by the Ministry of Urban Development, which will take a couple of more months, said a Ministry official. The Ministry can also consider using rules of the Ministry of HUPA as a template.
Buyers, however, will be able to get some relief under the rules only after the proposed Real Estate Regulatory Authority is formed, the deadline for which is April 30, 2017. A Ministry spokesperson said that some changes have been made in the Draft Rules placed in the public domain three months ago, incorporating some suggestions from consumer associations and real estate bodies.
As per the rules notified on Monday, regarding ongoing projects that have not received completion certificate in specified time, developers will have to make public the original sanctioned plans and changes made, total amount collected from allottees, money used, original timeline for completion and the period within which the developer undertakes to complete the project.
Within three months of applying for registration of a project, the developer will have to deposit in a separate bank account, 70 per cent of the amount collected and unused for ensuring completion of ongoing projects.
For registration of projects with authorities, developers will have to submit copy of PAN card, annual report comprising audited profit and loss account, balance sheet, cash flow statement and auditor’s report of the developer for the three preceding years, among other documents..
The rules also state that developers will have to refund or pay compensation to the allottees with an Interest Rate of SBI’s highest Marginal Cost of Lending Rate plus 2 per cent.