Pune

There seems to be confusion over the compounding fee under Real Estate Regulatory Authority (RERA) rules, notified by the state government, which has come into effect from May 1.

A recent report on Real Estate Regulatory Authority (RERA) Act implementation in states has stated that while the state has largely kept the rules "in line" with the Union government act, there is some dilution on the “penalty” for builders for non-compliance and on payment schedules.

RERA has the power to impose a fine of 5-10% of the entire project cost if the developer fails to comply with certain conditions which, according to a Crisil report, appears to be a "dilution" of rules.

Consumers have been pointing out that the penalty aspect would be clear once the three-month window period for registration is over. "There is certain vagueness regarding the penalty aspect which can range between 5-10% of the entire project. It would be at the discretion of the regulatory authority and that is definitely not clear," stated Vijay Sagar of Pune Grahak Panchayat. He cited that there were many consumers who were trying to register their complaints but had to wait till the developers register so that action could be initiated against them for any delay or violation.

The Crisil report largely gives comparison of nine states and the status of dilution in the laws pertaining to rules of ongoing projects, penalties for non-compliance, payment schedule, norms for escrow withdrawal and clause for structural defects. As of now, only 13 states and Union territories have notified the new rules, with Maharashtra launching a website with helpline number.

Credai President Shantilal Kataria stated that the state had clearly spelt out the rules on its website and made it interactive. "The rules have been beneficial to both consumers and developers as consumers can finally entrust faith in developers and there is a third party which can intervene," stated Kataria. The thrust of the act was mainly on bringing about better accountability, transparency and efficiency in the sector, defining the rights and obligations of both buyers and developers.

The developers will have to get the ongoing projects, that have not received completion certificate, and the new projects registered with the regulatory authorities within three months.

According to the report, while Gujarat has made the laws in respect to the parameters by showing lack of clarity, other states have some or the other parameters, which have shown dilution. "If the laws are not clear, there will always be an element of doubt which can be used to the advantage of middle men," stated a broker.

Consumer groups have said that unscrupulous builders can escape by paying just 5-10 per cent compounding fee.