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To protect the interest of consumers in the Real Estate Sector and to establish an adjudicating
mechanism for speedy dispute redressal.
This law vests authority on the real estate regulator to govern both residential and commercial real
estate transactions.
This law makes it mandatory for developers to post all information on issues such as project plan,
layout, government approvals, land title status, sub-contractors to the project, schedule for completion
with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information on to
the consumers.
The current practice of selling on the basis of ambiguous super built-up area for a real estate project
will come to a stop as this law makes it illegal. Carpet area has been clearly defined in the law.
The maximum jail term for a developer who violates the order of the appellate tribunal of the RERA is
three years with or without a fine.
SALIENT FEATURES
Currently, if a project is delayed, then the developer does not suffer in any way. Now, the law ensures
that any delay in project completion will make the developer liable to pay the same interest as the
EMI being paid by the consumer to the bank back to the consumer
The developer cannot make any changes to the plan that had been sold without the written consent of
the buyer.
This puts paid to a common and unpopular practice by developers to increase the cost of projects.
Lastly, every project measuring more than 500 square metres or more than eight apartments will
have to be registered with the RERA.
The law mandates every builder to keep 70% of collection from every project in Separate Bank
Account.
MAJOR PROVISIONS
The Major Provisions in the Act relates to following aspects:-
REGISTRATION
PROTECTION OF BUYERS
As 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 and not super built-up area
Carpet area has been clearly defined in the Act to include usable spaces like
kitchen and toilets.
REAL ESTATE REGULATORY
AUTHORITY AND APPELLATE TRIBUNAL
Appellate Tribunals will now be required to adjudicate cases in 60 days as against the
earlier provision of 90 days
Regulatory Authorities has to dispose of complaints in 60 days while no time frame was
indicated in earlier Bill.
Hits & Misses of Real Estate Act
For Consumers
HITS MISSES
Increased assertion on the timely completion of The timelines of approvals by regulatory
projects and delivery to the consumer. authorities have not been defined. Any delay
A step towards safeguarding their investment, in approvals from regulatory authorities could
as 70 per cent of the sales receipt will now be
locked in an escrow account. impact buyers as well.
An increase in the quality of construction due The Bill may lead to slightly higher prices of
to a defect liability period of five years. properties due to the reduced competition.
Balanced builder-buyer agreements.
New project launches might be limited as
Faster dispute resolution mechanism through developers may not be able to launch without
dispute settlement forums and appellate
tribunal. obtaining approvals, which could take two to
Sale on the carpet area to help improve three years.
transparency.
An increasingly-regulated broker environment.
Greater visibility into the developers delivery
track record.
Hits & Misses of Real Estate Act
For Developers
HITS MISSES
Increased scope for eliminating casual An additional layer of approvals may be
operators, leading to the better organization introduced against the extended list of
of the sector. approvals already required for projects.
Minimum standards of governance and No provision to rationalize the number of
accountability have now been set to an approvals required for a project or expedite
extent, and theres potential for driving approvals through a single window
standardization and professionalism in the mechanism.
sector.
Increased reliance on external capital to
Greater visibility into the developers delivery achieve high growth.
performances, segregating the established Possible impact on joint venture
and casual operators. arrangements.
Higher investment in the sector and a Potential delay in cash-flow realizations from
possible reduction in the cost of funds, projects.
leading to a lowered cost for the end users.
Rising
Tourism
Rise Of
Middle
Real Decline of
Joint
Class Estate Families
Easy
Availability
of Finance
Fiscal
Policy
Real Strong
Rising Demograp
FDI Estate
hics
Rise of
Middle
Class
First
Time
Buyers
Development
of new
Stream of
Business
Special Economic Zones
OBJECTIVES
Generation of
Promotion of exports
additional economic
of goods and services.
activities.
Promotion of
Creation of Development of
investments from
employment infrastructure facilities
domestic and foreign
opportunities. in the country.
sources.
Govt. Initiatives and Policy
Range of
There has been a Government
drastic curtailment benefits &
Liberalization of
in restrictive Reforms in the incentives
FDI rules and the
policies such as Integrated including
emergence of real
the Urban Land Township Policy. residential tax
Ceiling and estate funds. breaks and the
Regulation Act. Special Economic
Zones.
Major Players in Real Estate Sector
THE
BIG
FIVE
DLF Group
Founded in 1946
DLF Group is one of the biggest real estate giants
Built many high-quality buildings across the country, specifically in
Gurgaon
Tied up with Hilton Group to build whopping 100 hotels in India over the
next few years.
In current expansion plans, DLF has over 425 million sq. ft. of
development across its businesses, including developed, on-going and
planned projects.
Spread over 32 cities, mostly in metros and key urban areas across India
Financials of DLF
DLF is the market leader in this sector with net profit of 1547 cr.
It was way lower than its last year profit by more than 1000 cr.
It was well supported by the timely launch of IPL.
The share of this co. touched the all time high of 1227 in dec. 2007 which
was just 6 months after its issue and now trading at 337.
ANSALS
Founded by Lala Chiranji Lal Ansal
By far most dominant activity of Ansals has been Real Estate Promotion & Development
company has several landmark high-rise commercial building like Statesman House,
Ambadeep, Antriksh Bhawan, Tolstoy House, Indra Prakash, Navrang House and Ansal
Bhawan
Ansals have also completed several residential buildings like Gauri Sadan, Upasana at
Hailey Road & Dhawan Deep at Jantar Mantar road, all in the heart of New Delhi at
Connaught Place.
There is the most prestigious Ansal Plaza Shopping Mall associated with its work
Also it has made elite townships, Sushant Lok and Palam Vihar in Gurgaon and several other
places all over the country.
Their profit declined by 81.24% in the last financial year over the last year.
This is one of the badly hit company by the economic slowdown.
569 is the all time high of this company in 2006 and now trading at just 10% of its all time
high.
Parsavnath Developers
Skill Shortage.
Overvaluation of Property.
Highly Fragmented.
Lack of Transparency.
IMPACT OF RECESSION ON REAL ESTATE
Represent a person (promoter) before any real estate regulatory authority for
registration of real estate project,
Represent a person before any other competent authority for any other
purpose under Real Estate (Regulation and Development) Act, 2016.
The passing of Real Estate (Regulation and Development) Bill, 2016 has
opened a new opportunity for Company Secretaries holding Certificate of
Practice in terms of consultancy services.
By becoming an expert in the act he can indulge in providing advice in
respect of -
a. Various applicable provision on particular real estate project;
b. Registration and extension procedure of real estate project with
competent authority;
c. Various obligation, functions and duties of promoter in a real estate
project;
d. Penal Provisions under the act.
A Company Secretary holding certificate of practice as well a Company
Secretary in employment in Promoter Company can assist a Promoter in
registration of real estate project with the real estate Regulatory Authority
established under the act.
Close to $7 billion to $8 billion of venture capital expected to flow into Indian
real estate market.
A significant increase in project execution through Public- Private-Partnerships.
More demand for office and industrial space.
Current levels of investments in infrastructure are not sufficient to bridge the
gap between demand and supply.
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