Builders to pay 10.9% interest for delay in house delivery

[webmaster]

NEW DELHI: The Union government notified rules on Monday to implement the Real Estate Regulation Act (RERA), which will enable buyers who have invested in real estate projects including existing ones - to secure interest at 10.9% per annum+ for delayed possession.

In case a buyer is seeking a refund, they will now be entitled to a refund on the entire payment at the same rate, and the builder will have to repay the amount within 45 days of a claim being made. The interest rate has been fixed at 2 percentage points above the SBI's marginal cost of funds (the current benchmark lending rate for banks).

Now that the rules have been notified, every builder will have to register with the state regulator. The final rules specify that developers of ongoing projects will also have to deposit 70% of the funds collected, but which have remained unused, into a separate bank account within three months of applying for registration.

This is a major change from the draft rules, where this provision was absent, and is aimed at providing security to buyers and ensuring that construction is completed without the builder transferring the funds to another project. To address the problems being faced by buyers, some of whom have been waiting for their homes for up to 10 years, the rules also stipulate that the developers of ongoing projects specify the scheduled completion date while registering the project with the regulator.

The rules spell trouble for developers who have diverted funds collected from buyers, because, under the new law, the regulator would be obliged to issue judgments within 60 days of complaints being filed.

The rules also make it mandatory for a buyer to pay the interest at the same rate of 10.9% on the dues raised by developers. This will come as a major relief for buyers who have to currently shell out upwards of 15% interest for delayed payments.

The rules will be applicable to the Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep, an official release said. In a statement, the Union urban development ministry said it was working on similar rules for Delhi.The rules, it is learnt, will be notified in November.

With the Centre notifying the rules, states and UTs are expected to follow suit soon. As per the provisions of the RERA, 2016, the regulatory authorities have to be put in place by April 30, 2017, a day before the full Act is brought into effect. Chandigarh has set up a temporary regulatory authority , which makes it one of the first in India to do so.

http://timesofindia.indiatimes.com/busi ... 174510.cms

[naveenarichwal]

From May, refund for buyers if builders miss deadline

NEW DELHI: From May 1, 2017, all new house purchases will come with three commitments — a date of possession in writing, full refund of the amount paid with 10.9% interest in case of delay beyond the committed date of possession and interest for the delayed period, in case the buyer doesn't want the refund.

The Centre on Wednesday notified a standard house purchase agreement that builders all over India will have to sign with homebuyers. The notification under the recently enacted Real Estate Regulation Act will result in automatic termination of the sale agreement in case of a delay beyond the committed date of possession. The builder will have to make the refund within 45 days of the termination. Buyers who do not want to withdraw will be entitled to interest payment for the period of delay.

Guidelines notified by the Centre have provided for compensation in case of delayed delivery even for ongoing projects but the new sale agreements will apply only to projects launched from May 2017, when the law comes into force. The new rules, however, exempt any interest liability on the developer for delay caused by force majeure conditions such as war, floods, cyclone, and drought, which are beyond the control of the promoter.

At the same time, if a buyer defaults in payments, the developer can terminate the contract. The number of delayed payments is something that builders and buyers can mutually decide. The builder will have flexibility in deducting the booking amount and interest liability from the repayment made to the buyer. The sale agreement also stipulates that the total price of apartment or the plot shall be escalation free except when development charges are increased by the competent authorities.

Besides receiving timely payment from buyers, the agreement also provides for certain rights of promoters such as interest in case of delay in payments by buyer and additional payments for increase in carpet area up to 3% of area originally offered. The agreement also makes it mandatory for a developer to disclose the total number of apartments, carpet area, the number and area of garage or covered parking, and the date of grant of commencement certificate by the local authority, among others things.

In addition, the agreement has to provide the break-up of cost of construction, including the cost of the apartment, the proportionate cost of common area, preferential location charges and taxes and maintenance charges, among others. While the law was enacted earlier this year, the urban development ministry notified the rules on Monday.

http://m.timesofindia.com/india/From-Ma ... 215203.cms