All you need to know about the RERA Act

The real estate sector is set to finally get its own regulator from May 1, 2017. The Real Estate (Regulation and Development) Act, 2016 (RERA) becomes effective in the entire country from May 1, 2017.

Each state and UT will have its own Regulatory Authority (RA) which will frame regulations and rules according to the Act.

Here is what the RERA has in store for home buyers...

Source credit: Economic Times

Real estate prices

April 30, 2017, 20:55 IST

The prices haven't come down to the extent it was expected. Huge unsold inventory, lack of new demand, demonetisation amongst others has not led the builders bringing
the rack rate down albeit few discounts and freebies to the customers.

Impact of RERA:
Rohit Gera, MD, Gera Developments and VP Credai - Pune Metro, says, "Before RERA, the risk of delays, quality, title, and changes were borne by the customer. These will now be borne by the developer and there will be a premium that the flat purchasers will have to pay for transferring this risk to the developer. There is no room for developers to absorb these costs and so they may be transferred on to the customers by way of price increase."

Delayed delivery

April 30, 2017, 20:55 IST

Untimely delivery of real estate projects has been the biggest bane for the buyers. Of late, almost all projects especially projects launched 2010-2013 have defaulted in delivery within the stipulated time primarily because funds were diverted to new projects by the builders instead of using them in completing the existing ones.

Impact of RERA:
Now, as per the RERA Act, the promoter has to maintain a 'separate account' for every project undertaken wherein 70 per cent of the money received from the buyers shall be deposited. Such funds can only be used for the purposes of construction and land cost.

Real estate developers will have to furnish additional information regarding the ongoing projects for the benefit of the buyers besides depositing 70% of the unused funds in a separate bank account to ensure their completion.

Ongoing projects

April 30, 2017, 20:55 IST

Developers will have to make public the original sanctioned plans and changes made later, total amount collected from allottees, money used, original timeline for completion and the time period within which the developer will complete the project, certified by an Engineer/Architect/practicing Chartered Accountant.

Role of Regulatory Authority

April 30, 2017, 20:55 IST

Each Regulatory Authority in the state will have the responsibility to register and regulate real estate projects and real estate agents registered under this Act.

It will also be required to maintain a website for public viewing, of all real estate projects for which registration has been given.

Quality of construction

April 30, 2017, 20:55 IST

The quality of the construction has also been a matter of concern with several builders. The RERA rules provides for protection against this up to 5 years after possession.

In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale is brought to the notice of the promoter within a period of five years, it shall be the duty of the promoter to rectify such defects without further charge, within 30 days.

What you get to see

April 30, 2017, 20:55 IST

No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the RERA established under this Act.

Each advertisement has to carry the RERA registration number.

Registration of projects

April 30, 2017, 20:55 IST

Make sure you buy a project which is registered with the RA. Once the state has its RA established, builders will be required to register their projects with it by furnishing all the information including, financial statements, copy of legal title deed and other documents.

The builders will get a registration number project-wise i.e. tower wise.

Delayed delivery - compensation

April 30, 2017, 20:55 IST

If the promoter fails to complete or is unable to give possession of the property within the agreed timed-period, he has to return the total amount with interest at such rate as mentioned in the agreement to sale.

And, in case the buyer does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession.

Online information

April 30, 2017, 20:55 IST

After registration with RA, the builder will be given a login-id and password to create a page on RA's website to upload the project related information on authority's website.

It will show quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked; quarterly up-to-date status of the project; and amongst others.

Booking amount

April 30, 2017, 20:55 IST

Currently, most builders ask for 10 percent of the total cost of the property as a booking amount.

Now as per RERA, a promoter cannot accept more than 10 of the cost of the property, as an advance payment or an application fee, without first entering into a registered agreement for sale.

Credit : http://realty.economictimes.indiatimes.com/

Don't get fooled by builders over maintenance charges: Read this

There's a million yards to walk before one settles down in one's own home. This is true especially for those who buy their house from a developer.

From the time one books a house to actually getting its possession, there can be plethora of charges, some disclosed upfront, while others are buried under the loads of agreement papers, which are typically signed blindly by the buyers.

One such charge is the maintenance agreement between the buyer and developer. Most buyers do not pay much heed to maintenance charges in the initial stage of booking, but it comes back to haunt them as the possession date nears.

Here are a few facts you should know about the maintenance charge. Read on

AUTHOR: Sunil Dhawan, EconomicTimes.com

What are maintenance charges?

Every housing society has some common areas and as per the Real Estate (Regulation and Development) Act or RERA (well, even before the Act came into existence), the promoter or the builder is responsible for providing and maintaining essential services on reasonable maintenance charges to be paid by the residents.

Once the society's Resident Welfare Association (RWA) is formed, and the maintenance work is handed over to it, the builder can no longer charge for maintenance. RWA can then devise its own set of rules for maintenance charges.

Maintenance charges are applicable for parks, gardens, lobbies, stairs, elevators, fire escapes, entrances and exits of the building, community centres, common parking areas, installations of central services such as power light, air conditioning, and things that are necessary for a society's existence, maintenance and safety.

Are they compulsory?

Maintenance charges involve a contractual element between the buyer and the developer. It is included in the allotment letter, initially issued to the buyer after he has paid the booking amount.

The actual amount, however, is not mentioned and the builder indicates a range if asked by the buyer during the initial stages of the deal.

How are they calculated?

Not all societies have the same structure when it comes to maintenance charges. In some, it may be flat and fixed from each household, irrespective of the area of the apartment. In some, they are calculated on the basis of the area of the flat.

Says Ashwinder Raj Singh, CEO, Residential Services, JLL India, "The funds will be collected from the residents, based on either the principle of equal participation, where the flat sizes are almost the same, or per square feet (psf) charges for varying flat sizes." For a resale property, where the RWA handles the maintenance, the model by-laws for RWA might give indication of the charges.

How much is the amount and when to pay?

They are not the same in every society and can be anywhere between Rs 2 psf to Rs 25 or more psf. So, for a 1,500 psf apartment, if the maintenance charge is Rs 3 psf per month, the amount will come to about Rs 4,500 per month.

The builders may ask for 12 months, or 24 months, of maintenance charges in advance at the time of possession. Once handed over to the RWA, the frequency of collecting the maintenance charges is decided by it.

How much is reasonable?

In the absence of a regulatory mandate, can the builders charge arbitrarily, and are there any rules? Says Singh, "No, the developers can't charge maintenance charges arbitrarily. Even though many state governments have made rules regarding such charges, the most effective and useful legislation that provides clear guidelines is from the state of Maharashtra."

Some heads of expenses could include repairs and maintenance of the building, service charges for housekeeping, security, common area electricity, equipments, expenses on repairs and maintenance of the lift, including charges for running the lift. Says Singh, "As per widely followed norms, 0.75 per cent per annum of the construction cost of each apartment is charged towards expenses for regular repair."

Even though this could be the biggest expense head, the actual maintenance charge should be around it. Let's work some numbers. Say, a 1,800 sq. ft. apartment costs Rs 5,000 psf amounting to a total cost of Rs 90 lakh. If 0.75 per cent per annum goes towards repairs, it amounts to Rs 67,500, i.e., Rs 3 psf per month. In such a scenario, the maintenance charges of Rs 3-4 look apt. The builders should explain if there is any drastically different figure.

When does it hurt?

If the applicability and the quantum of maintenance charges remain unknown at the time of booking, and the buyer gets to know of them only at the possession stage, it will, obviously, come as a surprise to the buyer. Also, if the builder increases the amount from the following year indiscriminately or fixes the amount on ad hoc basis, it hurts the residents.

So, at the time of buying, can these charges be disclosed upfront? "Absolutely. However, certain charges are variable like water charges, upkeep of services, unforeseen repair, etc., that can't be decided while booking of the apartment," informs Singh.

RERA to the rescue

On possession, the builder makes the buyer enter into a maintenance agreement clearly specifying the actual amount and the frequency. But, later on they can be fixed mutually between the RWA and the builder.

"Yes, that should ideally be the practice and RERA has made it a part of its provisions to ensure that residents don't have to pay ad hoc charges. The clear guidelines in the rules shall make the process smooth for the buyers," says Singh.

Resident right and defaults

As a resident paying maintenance charges, you can look at the actual amount spent by the builder on maintenance, along with the break-up. Singh says, "It is the residents' right to be aware of the amount spent by the builder on maintenance. Till a society is formed, a builder pays for the maintenance and has to keep his books open for scrutiny by the residents."

If the owner has put his flat on rent, it still doesn't absolve both him and the tenant from the responsibility of paying maintenance charges. The final responsibility even if the flat remains unoccupied, rests with the owner.

However, he can make the tenant pay the charges after putting it in the agreement letter. In case of default, the RWA may cut off or withhold supply of essential services such as supply of water, electricity, lights in passages, staircases, lifts, etc.

Conclusion

It's always better to have a fair idea of the maintenance charges at the time of booking an apartment as they are recurring monthly charges. Also, try and participate in the process of arriving at the charges when the RWA takes the matter in its hands.

Credit : http://realty.economictimes.indiatimes.com/

Builder M3M India, forest officials booked for felling over 2,000 trees

When the incident came to the fore, the forest department ordered an enquiry, whose revelations left them red-faced

GURUGRAM: M3M India private limited, a renowned construction company, was booked for axing over 2,200 trees near Chauma village, with assistance from three forest officials According to the police, M3M builders had permission to cut only 20 trees but they went ahead and cut 2,243 trees till the first week of February.

When the incident came to the fore, the forest department ordered an enquiry, whose revelations left them red-faced. It was found out that the builder was aided by three forest officials identified as forest guard Praveen Kumar, forester Khajan Singh and range forest officer Amardeep. All three forest officials were suspended and a complaint was lodged against them at Palam Vihar police station on Saturday.

In the complaint, it was mentioned that forest guard Praveen Kumar took a bribe of Rs 3.5 lakh and in return allowed the construction company unchecked trespassing into the area to cut trees. Kumar also allegedly hid entry register to do away with all the proofs that could have exposed the scam.

The other two supervising officers were found guilty of inaction, despite having full knowledge of the scam.

An FIR has been registered against Karmbir Singh of M3M India, forest guard Praveen Kumar, Forester Khajan Singh and range forest officer Amardeep under sections 120-B (criminal conspiracy), 201 (hiding evidences) of IPC, sections 7, 12, 13 of Prevention of Corruption Act, 1988 and section 19 of Punjab Land Preservation Act 1900 at the Palam Vihar police station.

“No corruption will be tolerated in the forest department. We shall assist the police in the best possible way. Those guilty will be punished,” R R Jowel, additional chief secretary of forest department said.

Despite repeated attempts, M3M could not be contacted for their comments. TOI will publish their response when it is received.

Credit : http://realty.economictimes.indiatimes.com/

Accor Hotels to add 9 hotels in India by year-end

The French hospitality firm currently has 46 hotels with a total of over 8,700 rooms in India under ten brands ranging from luxury to economy spread across 19 cities.

NEW DELHI: Global hospitality major Accor Hotels plans to add up to nine hotels in India this year targeting to offer a total of over 10,000 rooms across its properties in the country.

The French hospitality firm currently has 46 hotels with a total of over 8,700 rooms in India under ten brands ranging from luxury to economy spread across 19 cities.

"We plan to open up to nine hotels in India this year. We will have 55 hotels in India by the end of this year with over 10,000 rooms," AccorHotels, Chief Operating Officer India and South Asia Jean-Michel Cassé told.

Out of the new hotels that the company is planning to open this year, the majority will be under Novotel and ibis brands, he added.

"Today the majority of our hotels are between Novotel and ibis brands. Around 50 per cent of our hotels are under these two brands and rest are in the other eight brands," Cassé said.

With the opening of new hotels, the company will enter new cities such as Lucknow, Guwahati, Nagpur and Coimbatore, he added.

Cassé said Accor is also looking to intensify presence in key cities in major Indian hubs.

When asked about the business model the company plans to follow for growth, Cassé said: "We want to continue developing asset light through management contract".

The hospitality major currently has brands like Pullman, Novotel, ibis, Formule1, Fairmont and Sofitel among others in India.

Accor Hotels Group, at present, has 2,40,000 employees in over 4,100 hotels in 95 countries. It has a portfolio of over 20 brands from luxury to economy.

Credit : http://realty.economictimes.indiatimes.com/

ASK Investment Managers crosses Rs 10,000 crore AUM in PMS biz

The AUM of ASKIM has grown over six fold in the last four years to INR 10,000 crores, from INR 1,500 crores, as of September 30, 2013

BENGALURU: ASK Investment Managers (ASK IM), a leading equity Portfolio Management Service (PMS) manager said that its assets under management and advisory have crossed Rs 10,000 crores.

The AUM of ASKIM has grown over six fold in the last four years to INR 10,000 crores, from INR 1,500 crores, as of September 30, 2013.

ASKIM has emerged as the largest Equity PMS or managed account services provider in the country, with almost 11 per cent of the domestic market share in overall discretionary equity assets managed under PMS structure as per SEBI Website.

With this important development, ASK Group AUM have crossed Rs. 30,000 cr, making it one of the fastest growing financial services entities in India. ASK IM has witnessed a significant surge in the number of new clients, even following the period of recent epoch-making event of demonetisation, adding over 1200 new clients, underpinning their faith in the quality of our offerings and superior long-term track record of performance.

ASKIM focuses on long-term wealth creation for its UHNI clients, emphasizing attainment of superior and high- quality, long-term compounding growth.

Sunil Rohokale, MD & CEO, ASK Group said, “This important milestone has been very valuable in ASK journey as we have sought this leadership position across all businesses and have maintained superior performance track record, risk management framework and customer centricity which have been instrumental in winning trust of our clients as well as distributor partners and be relevant to their investment needs. With the recent partnership with Advent International, ASK is confident of scaling up further its existing businesses, and exploring potential new opportunities in domestic and international markets.”

Bharat Shah, Executive Director, ASK Group observed, “India, as a country, has exceptional growth prospects and its most defining phase has just begun. We have benefitted from this while maintaining unstinted focus on attaining core investment objectives of ‘Capital Preservation’ and ‘Capital Appreciation’, underpinning the approach of disciplined investing into high-quality businesses, enjoying large size of opportunity, run by outstanding managements delivering superior earnings growth and buying into such quality franchises at a favourable margin of safety. A consistent philosophy and approach backed by disciplined execution has stood us in good stead over many cycles of the market.”

ASKIM singularly focuses on listed Indian equities for India-domiciled as well as off-shore clients, through segregated accounts as well as commingled funds.

Credit : http://realty.economictimes.indiatimes.com