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The much awaited real estate act, aimed at bringing transparency and accountability to the sector, is set to take effect on Monday across the country even though significant hurdles in implementing the law remain.

Real estate players have welcomed the implementation, saying it will bring a paradigm change in the way the Indian real estate sector functions.

The government has brought in the legislation to protect home buyers and encourage genuine private players.

The Real Estate (Regulation and Development) Bill, 2016 was passed by Parliament in March last year and all the 92 sections of the Act come into effect from May 1.

As per the new act, 70% of the funds collected from buyers would have to be deposited in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects. Projects with plot size of minimum 500 sq.m or at least eight apartments shall be registered with regulatory authorities. Both developers and buyers to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays.

Few Highlights are :

  •  The buyer will pay only for the carpet area (area within walls). The builder can’t charge for the super built-up area, as is the practice at present, where you get 900-1,000 sq. ft. carpet area if you book a 1,300 sq. ft. house (the rest is balconies and common spaces). The new law is expected to stop this practice.
  • The builder will have to provide for any structural defect in the building for five years.
  • Developers will be able to sell projects only after the necessary clearances. Under RERA, builders and agents will have to register themselves with the regulator and get all projects with more than eight apartments registered before launch
 

 

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