New rules to provide huge relief to home buyers.
By Sreekanth A. Nair
The draft real estate rules formulated by the housing and urban poverty alleviation ministry has proposed that property developers will have to pay 11.2% to buyers if they fail to hand over the apartments and villas to the buyers on time.
The rules is considered as a big relief to home buyers who have had a bad experience with apartments being delivered to them after much delay.
According to the draft rules, developers will have to state the completion date of a project, size of flats and promised facilities, to the customers. In each state and Union Territories, a Real Estate Regulatory Authority will have to be established. Projects without a completion certificate will have to be registered with the authority.
The draft rules follow the Real Estate (Development and Regulation) Act, 2016, that came into force on May 1. The proposed interest rate is 2 percentage points above the prime lending rate (PLR) of State Bank of India.
If the builders change the date for handing over the property, make changes in the size and layout of the apartment, and additional construction, they have to take the consent from 70 per cent of the allottees. Otherwise, the project will be canceled. In such a case, the authority can decide whether the project should be completed by an external agency with the consent of the allottees.
The rules are expected to give relief to customers from the struggles of apartments getting delivered at a delayed date. Most of the building projects in India are financed by home loans. But the buyers have to pay the interest on the loan even if the builder fails to deliver the apartment on time.
It’s estimated that almost 90% of projects in India do not get completed even after a year’s delay. If the buyer demands the withdrawal of money, then a certain amount is deducted as a penalty.
But the builders are of the opinion that if the rules are applied on existing projects, then the real estate sector would be badly hit. President of the Confederation of Real Estate Developers’ Associations of India, Getamber Anand, told The Times of India that all unfinished projects which were launched before 2012 could be termed as defaulters. So builders would have to pay interest to the buyers.