As per the Real Estate Act, the Real Estate Regulatory Authority (RERA) is expected to start functioning from May 2017.
All the ongoing projects – projects which have not received occupation certificate or completion certificate – must get registered with the RERA within 90 days of its formation.
With only days left, several real estate developers are gearing up for dealing with the changed reality driven by RERA. Developers are building in additional checks and control in key process such as sales and marketing; business development; project development; project management etc. to comply with the RERA provisions and also to enhance overall sales experience.
Another important focus area for developers is registration of ongoing projects. In addition to complying with RERA provisions; developers are viewing it as a marketing opportunity as an early project registration will help the developer market its project with added confidence.
However, several areas in RERA provisions require specific clarification/ attention, especially with respect to project registration. For instance:
1. Registration coverage – should projects which are complete and possession provided several years ago, but completion certificate is pending, needs to be registered?
2. Building plans – Can a promoter include proposed building plans alongwith sanctioned plans for under-construction projects as well?
3. Sales and marketing – can a developer sell or advertise projects pending registration when RERA is operationalised in May 2017?
4. Deposit of 70 per cent realizations in a separate bank account – how does the provision apply for ongoing projects?
5. Promoter definition – will land-owners or private equity investors qualify as promoters? What are the implications and responsibility of independent directors nominated by land-owners or lenders or private equity investors?
6. Definition of allottees – will agents, who underwrite a part of project qualify as allottees?
Promoters of real estate projects will need to undertake a careful review the arrangements with existing allottees and the project plans/specification/amenities etc. disclosed with RERA.