Property consultant India Sotheby's International Realty has suggested that the Delhi government should amend its realty law RERA to bring more projects and brokers under its ambit in order to protect homebuyers in the national capital. In its white paper 'Towards A Healthier Real Estate Market in the National Capital', the consultant pointed out that only 32 projects are registered under Delhi's RERA.
The Real Estate (Regulation and Development) Act, 2016 [RERA] was passed in Parliament in March 2016. Certain Sections of RERA were notified with effect from May 1, 2016 and remaining sections from May 1, 2017. The central law has been implemented in almost all states and UTs.
As per the law, no registration of the real estate project will be required where the area of land proposed to be developed does not exceed 500 square meters or the number of apartments does not exceed eight inclusive of all phases. "There is an urgent need to amend the RERA Act, to include 200 square meter or 4 floor development," the company said in a white paper.
Almost 90 per cent of Delhi's residential market would be covered with this one crucial amendment, it said. The consultant further suggested that the RERA registration should be made mandatory for all residential developments in Category A colonies, irrespective of size, number of units or any other exclusion that the builder might use.
"The total number of projects registered under various state RERAs nationwide as of November 2021, were 71,307 projects. In Delhi RERA however, only 32 projects were registered. "This number of RERA registered projects in Delhi is not only amongst the lowest in any Union Territory, it also falls dismally short when compared with RERA registered projects of cities like Mumbai and Bengaluru," the white paper pointed out.
In Delhi, only 435 real estate agents or brokers are registered under RERA as compared to nearly 4,000 in Mumbai City and around 9,000 in Mumbai suburbs. The consultant mentioned that the state government has the power to reduce these thresholds.
"Thus, the state government should consider notifying lesser thresholds and cover more projects under RERA," it said. A RERA registration number should be made a prerequisite for approving building sanction plans, completion certificate, and registration of sale deed. "Recognition of compliant builders and agents on RERA website will increase awareness and benefit home buyers in choosing the right people," the paper said.
Agent name and RERA registration number should be mandatory in all property transactions involving an agent, it suggested. Ideally every sale document should have agent details and its RERA registration number, to ensure proper implementation, the consultant felt. "We recommend the Delhi government to consider a 0.25 per cent discount on stamp duty for RERA registered projects," the paper said. India Sotheby's International Realty also urged the Delhi real estate regulator to ensure proper implementation of escrow account rule.
As per the law, developers need to transfer 70 per cent of the money received from customers in an escrow account maintained with a scheduled commercial bank. This particular provision prevents developers from siphoning off funds, using funds for other developments or buying fresh land. "We also recommend that various agreements such as Agreement to Sale and sale deeds, are standardized. While the RERA Act stipulates that, the practice is not being followed," the paper said.
The consultant stated that the Delhi RERA website does have a model agreement for sale, but builders rarely follow it. In Delhi's residential market, there are very few projects by organised private real estate developers. DLF, Raheja Developers, Parsvnath Developers and Unity group are currently developing multi-storeyed housing projects in the national capital.
Local private builders dominate the market. India Sotheby's International Realty is one of the leading housing brokerage firms in the national capital, particularly for big-ticket transactions in Lutyens Delhi and colonies in South Delhi.