The move will adversely affect the already subdued construction and realty sector which have invested nearly one lakh crore rupees in ongoing projects across the state.
HYDERABAD: The real estate developers are in for a major shock as the state government has decided not to exempt ongoing projects from the purview of the Real Estate (Regulation and Development) Act (RERA)-2016. The move will adversely affect the already subdued construction and realty sector which have invested nearly one lakh crore rupees in ongoing projects across the state. The RERA came into force on May 1, but states were given three-month time to prepare draft rules and issue notification. Indications are that the Telangana government will notify the Act in about a week’s time. “The bill will get the cabinet approval soon,” municipal administration minister K T Rama Rao told STOI.
In Hyderabad alone, builders have invested nearly Rs 75,000 crore in ongoing projects and in Karimangar, Warangal, Nizamabad and Khammam, another Rs 25000 crore worth projects. Once the Act comes into effect, regulatory and compliance charges will ensure that the expenditure per project for the builder will increase by 15 percent. Karnataka, Gujarat and Rajasthan have implemented the Act but exempted ongoing projects from its purview. Sources said representatives of the real estate sector in Telangana lobbied for a similar exemption in the state but were told by the government that there woould be no relief for the ongoing projects once the Act is notified.
“We don’t want to tinker with the central Act and we believe that exemption for ongoing projects from the Act may not stand legal scrutiny,” municipal administration secretary Navin Mittal told TOI.
Understandably, realtors are up in arms. “The new aspects were not part of the agreement between the buyer and the builder. Builders have to spend more than 20 percent to meet RERA guidelines. If the state government does not exempt ongoing projects, the real estate sector in the state will be severely affected. None of the projects would be viable as the total cost will increase substantially. This will lead to stoppage of real estate activity in the state” C Sekhar Reddy, former national chairman of Confederation of Real Estate Developers Association of India (CREDAI), told TOI.
Courtsey: Krishna Prasad |TNN | 09-July-2017