Real Estate (Regulation&

Development) Act, 2016

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 Real Estate and the housing sectors were highly unregulated
sectors

Lack of transparency in projects

No proper information about the builder

Lack of remedies available to the buyers

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 Introduction
 The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks
to protect home-buyers as well as help boost investments in the real estate industry.

 The bill was passed by the Rajya Sabha on 10th March, 2016

 By the Lok Sabha on 15 March 2016.

 The Act came into force from 1 May 2016 with 69 of 92 sections notified.

 The Central and state governments are liable to notify the Rules under the Act within a statutory period of six
months.

 Applicable to whole of India except Jammu and Kashmir

 Real estate regulatory authority (RERA) is the governing authority.

 The law is not Retrospective.

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 PURPOSE
 An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the Real
Estate sector.

 To ensure transparency in projects.

 To protect the interest of consumers in the Real Estate Sector and to establish an adjudicating
mechanism for speedy dispute redressal.

 To provide proper information about the Builder.

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 SALIENT FEATURES
 It establishes the State Real Estate Regulatory Authority for that particular state as the government
body to be approached for redressal of grievances against any builder. This will happen once every
state ratifies this Act and establishes a state authority on the lines set up in the law.

 This law vests authority on the real estate regulator to govern both residential and commercial real
estate transactions.

 This law makes it mandatory for developers to post all information on issues such as project plan,
layout, government approvals, land title status, sub-contractors to the project, schedule for completion
with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information on to
the consumers.

 The current practice of selling on the basis of ambiguous super built-up area for a real estate project
will come to a stop as this law makes it illegal. Carpet area has been clearly defined in the law.

 The maximum jail term for a developer who violates the order of the appellate tribunal of the RERA is
three years with or without a fine. ExoticaHousing.in
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 SALIENT FEATURES

 Currently, if a project is delayed, then the developer does not suffer in any way. Now, the law ensures
that any delay in project completion will make the developer liable to pay the same interest as the
EMI being paid by the consumer to the bank back to the consumer

 The developer cannot make any changes to the plan that had been sold without the written consent of
the buyer.

 This puts paid to a common and unpopular practice by developers to increase the cost of projects.

 Lastly, every project measuring more than 500 square metres or more than eight apartments will
have to be registered with the RERA.

 The law mandates every builder to keep 70% of collection from every project in Separate Bank
Account.

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 MAJOR PROVISIONS
The Major Provisions in the Act relates to following aspects:-

 REGISTRATION

 PROTECTION OF BUYERS

 REAL ESTATE REGULATORY AUTHORITY AND

APPELLATE TRIBUNAL

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 REGISTRATION
Who is liable to get Registration from RERA?
 All commercial real estate projects where the land is over 500 square metres.
 All residential real estate projects where the land is over 500 square meters or eight apartments, to register with
the Real Estate Regulatory Authority (RERA) for launching a project.
 For on-going projects which have not received completion certificate on the date of commencement of the Act, will
have to seek registration within 3 months.
 Real estate agents who facilitate selling or purchase of properties must take prior registration from RERA.
 Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by
the agent in every sale facilitated by him.
• What is the Process of Registration?
 Applicant has to file an application for registration with RERA in prescribed form along with prescribed fees and
documents.
 Application for registration must be either approved or rejected within a period of 30 days from the date of
application by the RERA.
 On successful registration, the promoter of the project will be provided with a registration number, a login id and
password for the applicants to fill up essential details on the website of the RERA.
What is the penalty for failure to get register?
 A penalty of up to 10 percent of the project cost or three years' imprisonment mayExoticaHousing.in
be imposed.
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 REGISTRATION

4. Consequence
Regulations are into force now 1. Debar the promoters from accessing
1. Time limit for registration
the its website in relation to that project For ongoing Projects – 3 months from
commencement of this Act
2. Specifying his name in list of defaulters
3. Display his photograph on its website
and inform the other RERA. For new projects - 30 days

4. Direct the bank to freeze the account

Registration

3. Revocation 2. Exceptions
1. On complaint 1. Area of land < 500 Sq. Meters

2. Suo moto
2. No. Of apartments < 8

Where promoters makes default or

violates any terms or conditions of the 3.In case of Renovation/ Repair/Re-
approval or promoters involved in any development
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 PROTECTION OF BUYERS
 The Act prohibits unaccounted money from being pumped into the sector.

 As now, 70 per cent of the money has to be deposited in bank accounts through
cheques.

 A major benefit for consumers included in the Act is that builders will have to
quote prices based on carpet area and not super built-up area

 Carpet area has been clearly defined in the Act to include usable spaces like
kitchen and toilets.

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 REAL ESTATE REGULATORY
AUTHORITY AND APPELLATE TRIBUNAL

 Establishment of State-level Real Estate Regulatory Authorities (RERAs) to regulate

transactions related to both residential and commercial projects

 RERAs will ensure timely completion and handover of projects.

 Appellate Tribunals will now be required to adjudicate cases in 60 days as against the
earlier provision of 90 days

 Regulatory Authorities has to dispose of complaints in 60 days while no time frame was
indicated in earlier Bill.
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 Hits & Misses of Real Estate Act
For Consumers
HITS MISSES
• Increased assertion on the timely completion of • The timelines of approvals by regulatory
projects and delivery to the consumer. authorities have not been defined. Any delay
• A step towards safeguarding their investment, in approvals from regulatory authorities could
as 70 per cent of the sales receipt will now be
locked in an escrow account. impact buyers as well.
• An increase in the quality of construction due • The Bill may lead to slightly higher prices of
to a defect liability period of five years. properties due to the reduced competition.
• Balanced builder-buyer agreements.
• New project launches might be limited as
• Faster dispute resolution mechanism through developers may not be able to launch without
dispute settlement forums and appellate
tribunal. obtaining approvals, which could take two to
• Sale on the carpet area to help improve three years.
transparency.
• An increasingly-regulated broker environment.
• Greater visibility into the developer’s delivery
track record.
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 Hits & Misses of Real Estate Act
For Developers
HITS MISSES
• Increased scope for eliminating casual • An additional layer of approvals may be
operators, leading to the better organization introduced against the extended list of
of the sector. approvals already required for projects.
• Minimum standards of governance and • No provision to rationalize the number of
accountability have now been set to an approvals required for a project or expedite
extent, and there’s potential for driving approvals through a single window
standardization and professionalism in the mechanism.
sector.
• Increased reliance on external capital to
• Greater visibility into the developers’ delivery achieve high growth.
performances, segregating the established • Possible impact on joint venture
and casual operators. arrangements.
• Higher investment in the sector and a • Potential delay in cash-flow realizations from
possible reduction in the cost of funds, projects.
leading to a lowered cost for the end users.
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Drivers and Growth for Real Estate
and Construction

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 Rising
Tourism

Rise Of
Middle
Real Decline of
Joint
Class Estate Families

Easy
Availability
of Finance

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 Fiscal
Policy

Real Strong
Rising Demograp
FDI Estate
hics

Rise of
Middle
Class
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 First
Time
Buyers

Medical Real International

Tourism Estate Tourism

Development
of new
Stream of
Business
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Overview of India Infrastructure

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 Special Economic Zones

OBJECTIVES

Generation of
Promotion of exports
additional economic
of goods and services.
activities.

Promotion of
Creation of Development of
investments from
employment infrastructure facilities
domestic and foreign
opportunities. in the country.
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sources.
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 Govt. Initiatives and Policy

Range of
There has been a Government
drastic curtailment benefits &
Liberalization of
in restrictive Reforms in the incentives
FDI rules and the
policies such as Integrated including
emergence of real
the Urban Land Township Policy. residential tax
Ceiling and estate funds. breaks and the
Regulation Act. Special Economic
Zones.

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Major Players in Real Estate Sector

THE
BIG
FIVE

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DLF Group 

Founded in 1946
DLF Group is one of the biggest real estate giants
 Built many high-quality buildings across the country, specifically in
Gurgaon
 Tied up with Hilton Group to build whopping 100 hotels in India over the
next few years.
 In current expansion plans, DLF has over 425 million sq. ft. of
development across its businesses, including developed, on-going and
planned projects.
 Spread over 32 cities, mostly in metros and key urban areas across India

Financials of DLF
 DLF is the market leader in this sector with net profit of 1547 cr.
 It was way lower than its last year profit by more than 1000 cr.
 It was well supported by the timely launch of IPL.
 The share of this co. touched the all time high of 1227 in dec. 2007 which
was just 6 months after its issue and now trading at 337.
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ANSALS 


Founded by Lala Chiranji Lal Ansal
By far most dominant activity of Ansals has been Real Estate Promotion & Development
 company has several landmark high-rise commercial building like Statesman House,
Ambadeep, Antriksh Bhawan, Tolstoy House, Indra Prakash, Navrang House and Ansal
Bhawan
 Ansals have also completed several residential buildings like Gauri Sadan, Upasana at
Hailey Road & Dhawan Deep at Jantar Mantar road, all in the heart of New Delhi at
Connaught Place.
 There is the most prestigious “Ansal Plaza” Shopping Mall associated with its work

 Also it has made elite townships, Sushant Lok and Palam Vihar in Gurgaon and several other
places all over the country.

Financials Of Ansals API

 Their profit declined by 81.24% in the last financial year over the last year.
 This is one of the badly hit company by the economic slowdown.
 569 is the all time high of this company in 2006 and now trading at just 10% of its all time
high.

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Parsavnath Developers
• It was incorporated on July 24, 1990 under the
Companies Act, 1956 as Parsvnath Developers
Limited.

• With more than two decades of experience in its

repertoire, the group has already stamped its
presence already in seventeen states and going
Pan – India.

• It has made various developments in areas like

GURGAON, Noida, South Delhi.

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Unitech Group
 Plans to invest US$ 720 million in building hotels in the country
 Its partner for this venture is Marriott International.
 Carved a niche for itself in India with its sprawling properties and projects
in Bangalore, Gurgaon, Noida, Greater Noida and Kolkata
 Unitech Group took over projects in International areas as well.
 Actively involved in construction projects of power plants, expressways,
highways, transmission lines, classrooms, amusement parks.
 Radisson Hotel, New Delhi has won accolades for its wonderful
infrastructure, astounding interiors, ideal location and extra ordinary
facilities for the distinguished customers.

 Rohini Amusement Park is also a creation of Unitech Group.

 The commercial complexes like Global Business Park, Signature Towers,

Unitech Business Park and Unitech Trade Center and the launch of
Millennium Plaza & Infocenter in Gurgaon have made Unitech Builder
earn a good reputation in the industry.
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K.Raheja  Raheja Developers Limited, (RDL), formerly Raheja Developers
Private Limited, is an Indian real estate development company with
its headquarters in Delhi, India.
 K Raheja corp. has been the torch bearer of the green cause for the
real estate industry, dating back to 2007 when it signed an MOU
with CII –Green Building Council.
 In 2008, Raheja Developers planned to build a Special Enterprise
Zone (SEZ) in Gurgaon at an estimated cost of $660M US.
 The development was to be on a 255-acre (103 ha) site but the
project did not advance.
 In a Gazette Notification of the Government of India on 29 January
2014 the Raheja SEZ was denotified, and the whole SEZ project
scrapped

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BARRIERS IN GROWTH OF REAL ESTATE

Skill Shortage.

Non Availability of Statistics.

Overvaluation of Property.

Highly Fragmented.

Lack of Transparency.
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IMPACT OF RECESSION ON REAL ESTATE

Incompletion of MEASURES TAKEN BY UNITECH

Cash
previous
starvation. QIP issuance to reduce debt.
projects.

Reduced promoter’s stake from 64% to 51%.

Less demand in Increased confidence with customers on project

Bad Debts.
all segments. delivery.

Major Strategic restructuring.

MEASURES TAKEN BY DLF

Launched Payment of short Terminated Sale of

affordable term debt by projects with properties for Cost reduction
housing project. raising long term long gestation liquidity through tight
cash flow.
debt. period. preservation.
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IMPACT OF BUDGET

Overall Impact considered to be marginally positive.

Infrastructure investment to be raised over 9% of GDP.
Funding pressure on construction companies to be eased by PPP.
PPP infrastructure projects to be refinanced upto 60% through IIFCL.
Rs 39.7 billion allocated for rural housing schemes.
Focus on providing housing to people of economic weaker section & lower income
group.
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Opportunities
for
Company
Secretaries

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 Compounding Drafting of
Advisory
of Offence Various
role
Documents

Opening of Status Report

Bank Accounts of Every Registration
& Deposits Project
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As per Section 56 of the act, a Company Secretary holding certificate of practice
has a can appear on behalf of applicant or appellant before Appellate Tribunal or a
Regulatory Authority or Adjudicating Officer as the case may be.

Hence a Company Secretary holding certificate of practice can –

Represent a person (promoter) before any real estate regulatory authority for
registration of real estate project,

Represent a person before real estate appellate tribunal.

Represent a person before any other competent authority for any other
purpose under Real Estate (Regulation and Development) Act, 2016.
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 The passing of Real Estate (Regulation and Development) Bill, 2016 has
opened a new opportunity for Company Secretaries holding Certificate of
Practice in terms of consultancy services.
 By becoming an expert in the act he can indulge in providing advice in
respect of -
a. Various applicable provision on particular real estate project;
b. Registration and extension procedure of real estate project with
competent authority;
c. Various obligation, functions and duties of promoter in a real estate
project;
d. Penal Provisions under the act.

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 A Company Secretary holding certificate of practice as well a Company
Secretary in employment in Promoter Company can assist a Promoter in
registration of real estate project with the real estate Regulatory Authority
established under the act.

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Close to $7 billion to $8 billion of venture capital expected to flow into Indian
real estate market.
A significant increase in project execution through Public- Private-Partnerships.
More demand for office and industrial space.
Current levels of investments in infrastructure are not sufficient to bridge the
gap between demand and supply.
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