Builders must share project completion date, flat sizes, etc

There is good news for non-resident Indians (NRIs) as members of the largest expatriate community in the UAE invest billions of Rupees in Indian real estate every year.

Now, the draft rules of the Real Estate (Development and Regulation) Act, 2016 stipulate that developers in India may have to pay 11.2 per cent interest to buyers for delays in handing over apartments and homes, says a report in Times of India.

The interest rate compensation has been planned 2 percentage points over and above the prime lending rate (PLR) of State Bank of India, the newspaper said.

A home loan from the bank is generally pegged at 0.20 percentage points to 0.80 percentage points over and above the marginal cost of fund-based lending rate at 9.15 per cent, which acts as the PLR for a retail loan. This thus translated into 11.2 per cent as against the home loan rate of 9.35 per cent to 9.95 per cent.

The rules also state projects without a completion certificate will have to register with the Real Estate Regulatory Authority, to be set up in states/Union territories within three months of the rules being notified, Moreover, builders will have to give information on completion date of a project, size of flats and promised facilities, state the draft rules, published to seek public comments till July 8.

Any violation such as delay in offering possession, increase in the size of apartments, change in layout and construction of additional towers in a project without taking consent from 70 per cent of the allottees can lead to cancellation of registration, the report said. In such a situation, the authority can take any decision, including getting the project completed by an external agency with the consent of the buyers’ association.

Akshay Singh, who bought a property in Thane, said that he has been waiting for handover of his apartment for the past six months.

“The deadline for handover expired six months ago. The developer has informed us that it will take another six to eight months for him to complete the project, but is not willing to pay any penalty for the delay,” he told Emirates 24/7.

“The contract that I signed has a number of clauses and he has cited one of it to refute my claims of compensation. I sincerely hope that the penalty clauses make it tough for developers and compels them to meet their obligations,” he asserted.

In 2013, Emirates24|7 reported that a delegation of top Indian real estate developers, led by the then Union Housing Minister Girija Vyas, had visited Dubai to study the real estate regulations, project approval procedures and working of Rera.

In April 2015, the government of India had approved the Real Estate Development and Regulation Bill, to set up a real estate regulatory authority, akin to Dubai’s Real Estate Regulatory Agency (Rera). Earlier, there was no escrow account system in place with developers opening bank accounts to receive the customer payments. However, the law will not make it mandatory for opening of escrow accounts, which will protect investor fund.

Dubai set up Rera in 2007 following a government decree with the agency being responsible for regulating the emirate’s real estate sector, formulating strategies, regulating the activities of companies that manage residential compounds, as well as the activities of real estate brokers and the Owners Associations.

The agency, headed by Marwan bin Ghalitha, has been empowered to issues rules and regulations that qualify activities of brokerage, lease contract registration and certification, as well as issue licence for real estate development entities.

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UAE NRI Alert: Get 11% penalty for project delays