Conversations with INCOR Group – What Does RERA Act Mean For Home Buyer – Part 2

Continuing our ‘Conversations with INCOR Group’ series, this is the second part of the questions a prospective real estate customer may have regarding the Real Estate (Regulations and Development) Act, 2016.

Q7. I am planning to purchase an apartment in Phase 3 of a project, of which Phase 1 is complete and Phase 2 is underway. Do the original plans and timelines submitted by the developer hold true for Phase 3?

A. It depends on whether the developer registered the entire property at one go with the Real Estate Regulatory Authority (RERA) or is registering phase wise. In case of the former, the developer cannot change his original plans and/or timelines for Phase 3 without consent of 2/3rd customers of this phase, as well as RERA’s approval.

However, it is most likely that developers will go in for the latter approach, wherein they shall register each phase separately with RERA as a new project. Doing so provides the developers flexibility as well as a hedge against any unforeseen situations at the time of beginning a major multi-phase project, often spanning multiple years. Though this increases the cost of compliance for a developer, its benefits to them outweigh this increase in cost. Large, integrated townships too are likely to see its developers take the same approach.

Q8. The developer, from whom I purchased my unit, has sold it to another developer, with plenty of work still remaining to be done on the project. As a customer, what are my rights?

A. The Act has considered such a scenario where the developer is unable to complete the project and sells it to another developer or consortium midway. Post the Act, the developer cannot take such a decision, without the consent of at least 2/3rd of the project’s customers as well as approval from RERA. Again, should a customer own multiple units, he/she would be considered as a single customer only and will not have any additional voice compared to a single unit owner. The new developer would inherit all the rights, responsibilities and timelines mentioned in the agreement by the original developer and would need to register accordingly with RERA.

Q9. I am planning to purchase an apartment in an upcoming project. I am, however, apprehensive about the quality of construction of the apartment and do not wish to pay for major repairs 2-3 years down the line due to poor quality. Is there any recourse for me?

A. A major feature of the Act is the formulation of a defect liability clause, which states that the developers of all projects covered under RERA are liable for fixing any issues related to the construction of their project for a 5 year period, post-handover. This is good news for both customers and developers. Customers get an assurance that developers will use good quality materials and techniques for construction, hence, ensuring they won’t have to spend a fortune later on for repairs. For developers, this can serve as a key differentiator, helping them attract more customers while driving unscrupulous players out at the same time.

It is likely that apartment prices will increase, as a result of this clause. Customers should look at this increase as an insurance or warranty payment being made to keep their home looking as great as it was when they took possession.

Q10. I am considering purchasing an apartment in an under-construction project in Hyderabad, while my cousin is planning to make a purchase in an upcoming project in Bangalore. Does the same Act and its provisions apply to both our properties?

A. No. Real estate is a state subject under the Constitution and each state will have to, based on its own needs and circumstances, come out with their own version of the central Act. It’s this state version, which will be applicable to all projects within the state’s boundaries. Similarly, the Union Territories of Delhi and Puducherry, which have their own state governments, also need to come out with their own version of the Act, while the remaining Union Territories have to adhere to the central Act.

The central Act lays down a set of guidelines, which states are free to modify. At the same time, the state governments are expected to adhere to the broad essence of the central Act and not tinker with the same. However, one needs to wait for the states to come up with their Acts to assess the impact of the same.

Q11. I am planning to sell my apartment to another buyer. Will the Act apply to this resale transaction and if so, must I too quote the carpet area of the apartment?

A. The secondary (resale) market is out of scope of the Act, which primarily deals with transactions between developers and customers. At the same time, the implications of the Act are far-reaching, prescribing changes to certain existing practices in the sector. Keeping in mind that post-implementation of the Act, all primary transactions are to be sold on the basis of the carpet area, it is quite likely that resale transactions will follow the same practice.

Q12. While purchasing an apartment, the developer has, apart from the basic sales price of the apartment itself, separately charged me for the amenities provided such as the parking, clubhouse etc. which all adds up to the final overall cost for me. Does the Act have any stipulation in this regard?

A. The Act is silent on how such infrastructure facilities (both internal and external) should be charged by the builder. The Act only mentions that the Basic Sales Price (BSP) shall be based on the Carpet Area, instead of the Saleable Area. Hence, one can assume that the infrastructure charges will continue to be part of the overall project cost to be paid by the customer, rather than the BSP. However, one must wait for the respective state’s version of the Act, before coming to a definitive conclusion on this point.


This is a good time to be a home buyer. The Real Estate (Regulations and Development) Act has come up with a number of provisions, which benefit both customers and reputed developers and along with demonetization, should push the fly by night operators out of business. Add to this, the recent reduction in home loan rates by major banks and housing finance companies offers a great financial incentive for home buyers.

Considering the increasing demand for quality housing, the upcoming implementation of the Goods and Services Tax (GST) on 1st July 2017 and the inflation in the economy, home prices are likely to rise in the near future. For a home buyer, this is as good an opportunity as any to go in for their dream home, which they will get with an assurance of quality and at a good rate, provided the right opportunity presents itself.

One Reply to “Conversations with INCOR Group – What Does RERA Act Mean For Home Buyer – Part 2”

  1. Hi team, As I have went through the Incor upcomming project in patancheru today.. projectname was also not mentioned.I have visited the site and had a discussion with the marketing team..I want to know ..what is the acknowledgement you are providing for the individuals who are paying the token amount for booking the flat ? If 100% payment was done in month …the registration of site will be done at the same day of complete payment or we have to wait until the completion of project for registration..we are very much concerned about the trust .

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