The real estate industry has already been suffering with less cash inflow because of large inventories that are waiting for the buyers and now it is even hit harder according to the draft rules unveiled by the government. Though it is a big relief for the home buyers who would be receiving handsome interest for the delay in project but if this rule goes through the builders will be hit hard.
Though the delay is mainly because of the dispute between builder, owner and developers. Builders try to term these as situation which are beyond their control to avoid being held liable for deficiency in service.
Now as per the new ruling, Developers may have to pay as much as 11.2% interest to buyers for delay in handing over apartments and homes. This rule also mandates all builders that all projects without a completion date will have to register with Real Estate Regulatory Authority within 3 months of the rules being notified.
The buyers who are in this category has authority to ask for compensation, they have two options available with them-either they can go for complete refund along with the interest rate or just the interest rate for the period of delay. The draft real estate rules have been formulated by the housing and urban poverty alleviation ministry within two months of some sections of the Real Estate (Development and Regulation) Act, 2016 coming into force on May 1this year.
The interest rate has been kept 2% higher than the prime lending rate (PLR) of the State bank of India.
Most of the developer in our network are saying that if the rules are applied on ongoing projects the sector will be hit severely and there could be further delay.
President of the Confederation of Real Estate Developers’ Associations of India (CREDAI), Getamber Anand, said all unfinished projects, which were launched before 2012, can be termed as defaulters and under the draft rules, if buyers demand their money back, developers will have to return at over 11% rate of interest.
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