Ministry of Housing and Urban Poverty Alleviation (“MHUPA”) vide press release dated April 30, 2017 notified that the Real Estate (Regulation & Development) Act, 2016 (“Act”) will come into force from May 1, 2017.After a nine year long wait, regulation of real estate sector involving over 76,000 companies across the county has become a reality from May 1, 2017. All 92 Sections of the Act have come into force following which the developers will have to get all the ongoing projects that have not received Completion Certificate and the new projects, registered with Regulatory Authorities within three months i.e. by July end. This enables the buyers to enforce their rights and seek redressal of grievances after such registration. MHUPA has formulated and circulated Model Real Estate Regulations for adoption by the Regulatory Authorities in the States/ Union Territories. Under these Regulations, developers are required to display sanctioned plans and layout plans of at least 3 feet X 2 feet size at all marketing offices, other offices where properties are sold, all branch offices and head office of the promoters in addition to the site of project.

Some of the major provisions of the Act, besides mandatory registration of projects are:

  • Depositing 70% of the funds collected from buyers 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.mt or 8 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;
  • Liability of developers for structural defects for five years;
  • Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.