3 Things About Real Estate Law You Probably Do Not Know
Come May and the Real Estate (Regulation & Development) Act, 2016, will usher in a new era in Indian's real estate market. Have we all not waiting for the new law to come and purse the sector of all its ills? We know for sure that the Act would bring transparency into the sector and make buyers life much easy.
But, here's what you would have probably missed about the new law:
What happens to projects within 500 square metres (sqm)?
Where area of land proposed to be developed does not exceed 500 sqm or number of apartments proposed to be developed does not exceed eight, inclusive of all phases, the project needn't be registered at all. If the authority considers it necessary, it can also reduce the threshold below 500 sqm or eight apartments. If you thought that 500 sqm is the minimum permissible area on which a construction can be done, you are wrong. Hence, a lot of plots would be in the exemption range, thereby rendering small buyers unarmed. In this case, buyers need to watch out for the projects they are settling for.
Take for example, the Lucknow Development Authority's (LDA) case. The authority recently reduced land limit for building flats. Previously, it was 2,000 sqm and now it is down to 300 sqm. The move was justified on grounds that this would help regularise apartments coming up in areas where building norms are usually flouted. Housing demand has given rise to rampant construction works even in the peri-urban areas, therefore reducing the size limit to 300 sqm could help developers come up with approved residential layouts.
Areas such as Mahanagar, Aliganj, Indiranagar, Vikas Nagar, Gomti Nagar and Nirala Nagar could be beneficiaries. The LDA is identifying potential locations keeping in mind the width of the road and proximity to amenities, etc. Three-storey buildings are permissible in small plots of 300 sqm here and the LDA will allow G+3 in such plots beyond which an additional housing unit can be added every 100 sqm area. A 300-sqm plot ideally should have four flats and deviations would be penalised. A lot also depends on the permissible floor area ratio in the area.
As a buyer, you must arm yourself with this knowledge. While there are always checks and balances, if you are settling for a private builder's project that is constructed within 500 sqm plot, check the developer's track record. Ask for approved building layouts. Insist on completion and occupancy certificates, too.
Completion certificate received? You have to do the due diligence
The provisions in the law clearly point out that where the promoter has received a completion certificate for the real estate project prior to commencement of the Act, such a project needn't be registered with the authority. Therefore, if prospective home buyers are settling for a property completed before March, 2016, the onus of proper research and due diligence falls on you.
Renovated, repaired and redeveloped? Out of the Act
For purpose of renovation or repair or re-development which does not involve marketing, advertising, selling or new allotment of any apartment, plot or building, the project needn't be registered under the law.
In case of a redevelopment where usually a large house or a duplex can give way to the rise of a multi-storeyed apartment, a buyer must be sure about the construction quality and all other documentation and procedures which are necessary.
Has your house owner renovated and rebuilt to an extent that it can house many other families? Perhaps he needn't have to advertise to sell the other newly built floors and could clearly flout the rules. Watch out if you were planning to buy a unit from such a seller. Ensure you have everything documented and that the layout is approved.