The government of India took a historic step in 2016 with the approval of Real Estate Regulation and Development Act (RERA) ushering in a hopeful era of transparency and regulation in the real estate sector. The state of Maharashtra was one of the frontrunners to notify the rules and set up a website to register the projects. As the Maharashtra government is still in the process of ironing out the details of RERA's implementation; developers, promoters and real estate agents are also trying to adjust to the new environment. While several aspects regarding the implementation of the Act remain ambiguous, we believe that developers should follow the directives prescribed in the Act: registering with the regulatory authority, opening and maintaining a separate account, ensuring clarity in land title and ownerships and comply with all other guidelines specified by the Act and the regulatory authority. Buyer Groups will benefit the most from this new implementation since they can now appeal and resolve their grievances with a dedicated authority.

1. Maharashtra
RERA transpires -
What next?
Uttara Nilawar Manager | Mumbai
Surabhi Arora Senior Associate Director | India
The government of India took a historic step in 2016
with the approval of Real Estate Regulation and
Development Act (RERA) ushering in a hopeful era
of transparency and regulation in the real estate
sector. The state of Maharashtra was one of the
frontrunners to notify the rules and set up a website
to register the projects. As the Maharashtra
government is still in the process of ironing out the
details of RERA's implementation; developers,
promoters and real estate agents are also trying to
adjust to the new environment. While several
aspects regarding the implementation of the Act
remain ambiguous, we believe that developers
should follow the directives prescribed in the Act:
registering with the regulatory authority, opening
and maintaining a separate account, ensuring clarity
in land title and ownerships and comply with all
other guidelines specified by the Act and the
regulatory authority. Buyer Groups will benefit the
most from this new implementation since they can
now appeal and resolve their grievances with a
dedicated authority.
Maharashtra was one of the first states to notify the
RERA rules and establish a Regulatory Authority to
oversee RERA's implementation into the state. The
rules stipulate that all new under construction projects
must register with the authority by July 31, 2017. After
that date, developers without registration won't be
allowed to advertise or sell projects in the market
anymore. In the wake of such requirement, developers
and agents have both geared up for the registration
process.
However, RERA's compliance appears to be challenging
for developers and promoters in the beginning, as it
requires all construction approvals before registration.
Secondly, the registration process is new to developers
hence they are cautious about providing accurate
estimates regarding their project and the required sale
agreement. Moreover, promoters are legally bound and
liable regarding the land title, completion on time and
maintenance of project. Therefore, developers are
extremely careful and seeking for legal advice before
registering. Developers, promoters and real estate
agents have only a 2-month window period to complete
the whole process so we expect registrations to increase
significantly within the coming 2 months. After that
period, apartment sales and advertisement will be
restricted.
According to the Confederation of Real Estate
Developers Association of India (CREDAI), no less than
30,000 projects should be registered in Maharashtra. As
of May 30, 2017, only 13 projects and 900 real estate
agents could register with the authority. There are eight
projects from the Mumbai region, four from Pune and
one from Nagpur.
In our opinion, the infrastructure may not be ready to
support the registration of that many projects. Thus, it
may lead to deemed registration of the projects after 30
days as mentioned in the regulations. However, we
advise developers to abide by all regulations and provide
complete information on the website to avoid any penalty
at a later stage. The MahaRERA regulatory authority has
already commenced checking non-registered projects
and issued a few notices to real estate agents and
developers for non-compliance.
Table 1: Maharashtra RERA Timeline
Maharashtra RERA Timeline
May 1, 2017 Maharashtra RERA came into effect
July 31, 2017 All projects, promoters and real estate
agents to be registered on the
MahaRERA website
August 1, 2017 Promoters and Real Estate Agents can
commence advertisement and sale with
their registration number
As of May 30, 2017, 13 projects and 900 agents have
registered on the MahaRERA website
Source Colliers International India Research
Colliers Flash
MUMBAI | RESEARCH
08 June 2017

2. 2 Colliers Flash | 08 June 2017 | Mumbai | Research | Colliers International
Who needs to register?
The first step towards the implementation of RERA is to
register with the Real Estate Regulatory Authority.
According to the Act, following are the entities who need
to complete registration before July 31, 2017
> All new projects with a land area greater than
500 sq m and more than 8 apartments
> All under construction projects where occupancy
certificate (OC) or completion certificate (CC)
has not been received
> All redevelopment projects that include a sale
component.
> Real Estate agents, including any person, listing
websites, newspapers, exhibitions, related to the
market, advertising, sale or purchase of
apartments in the state of Maharashtra should
be registered with the regulatory authority,
whether it is a promoter or a real estate agent.
Registration of a real estate project and real estate agent
Source Colliers International India Research
Form ‘G’ for registration of the real estate agent
Form ‘H’ Registration Certificate of a real estate agent
>
>
>
>
>
>
Name, photograph, contact details, address, PAN card number of all the developers
Details of registration in any other state or union territory
Income tax returns for the last three financial years
Details (if any) of all real estate projects and their promoters on whose behalf he
has acted as real estate agent in past 5 years
Details of pending civil and criminal cases
Granted by the Regulatory Authority subject to a few conditions
Form ‘I’ Rejection or Revocation of registration
Form ‘J’ Application for renewal of Registration
Form ‘K’ Renewal of Registration of the real estate agent
> Granted by the Regulatory Authority subject to a few conditions
Real estate agent
Form ‘A’ for registration of the project
Form ‘B’ for promoter declaration
>
>
>
>
>
>
Name, photograph, contact details, address, PAN card number of all the developers
Legal land title and information related to encumbrances; joint development agreement in case of
collaboration
Estimated project cost, sanctioned plan, layout plan, floor space index (FSI) to be consumed,
proposed number of buildings, floors, etc.
Details of the projects launched by the promoter in the last five years
Name and address of the bank or banker with which account a separate account will be maintained
Declaration by the promoter acknowledging all responsibilities (supported by an affidavit)
Form ‘C’ Registration Certificate of a project
Form ‘D’ Rejection or Revocation of a project
Form ‘E’ Application for extension of Registration
Form ‘F’ Certificate for extension of a project
>
>
Granted by the Regulatory Authority once sale agreement and conveyance deed is in place and 70% of the monies
deposited in a separate account
Registration valid for 5 years
> Granted by the Regulatory Authority once all conditions are fulfilled by the promoter
Real estate project – New and Ongoing

3. 3 Colliers Flash | 08 June 2017 | Mumbai | Research | Colliers International
The registration of a real estate project is required,
> If the project entails renovation, repair or
redevelopment and does not involve any form of
marketing or advertisement.
> If only structural repairs of existing buildings are
being undertaken by or through any Public
Authority or as per any legal requirement
Colliers' View: Resilient pre-
requisites to register projects
In our opinion, various clauses that can be interpreted
differently along with a big compliance requirement are
creating confusion among stakeholders. For example,
the term 'promoter' has been a major point of discussion
to complete the registration process. The promotor
needs to give a declaration supported by an affidavit in
Form 'B' stating:
- That he has the legal title to the land on which the
development of the project is proposed
- That the project land is free from all encumbrances.
- That the promoter shall complete the project within the
given time
- The promoter shall maintain a separate project account
for each project and deposit 70% of the project
proceeding into this account for all the ongoing and new
projects to cover the 'project cost' (see table 3) and shall
be used only for that purpose.
The registration process is new and feels quite complex,
as developers must provide past records of the last five
years, it should increase the barriers to entry into the real
estate industry; and should adversely impact smaller
enterprises. Even financial institutions will prefer to fund
registered projects so smaller enterprises may find it
difficult to venture into the market due to liquidity issues.
We anticipate that joint development will be a preferred
mode of development; rather than outright land
purchase. In our opinion, for ongoing projects, the
requirement of depositing 70% of the project proceeds
into a separate account can be challenging for the
developers. According to the Act, the promotor needs to
provide the information regarding the project account in
Form 'A' during registration of the project. As of May 1,
2017, the government had directed developers to open a
separate account within 90 days. Even in a case of
multiple lenders, the bank account should be separate
from the project one and should be used only to cover
the project costs. As the act entails, legal binding and
unlimited liability against promoter, stakeholders are
being more cautious, and there are different
interpretations regarding the term promoters. (see table
3).
"We suggest developers to seek legal
advice before registering projects as
non-compliance notice may lead to
significant penalty in the long term."
Due to liquidity issues, we foresee that there should be
limited supply as the compulsory deposit of 70% should
limit the cash available for new development and may
result in reduced inventories going forward.
Table 3: What defines a promoter?
Source: Colliers International India Research
Table 4: What are the 'project costs'?
LAND COST AND COST OF CONSTRUCTION
Acquisition of ownership and title of the land parcels, lease
charges, overhead, marketing, legal supervision costs
Premium for development or redevelopment rights
Cost of TDR, FSI, fungible FSI costs
Stamp Duty, transfer charges, registration fees, etc.
Costs incurred in case of inheritance or gift, rehabilitation
scheme
Payment of Taxes, Fees, Charges, Premiums, Interest etc. to
the government
Principal sum and interest, paid or payable to any financial
institutions excluding loan obtained to purchase the land or to
obtain development rights
Source: Colliers International India Research
You are constructing or participating in the
construction of an apartment for sale purposes
You are involved in the development of a land
into a real estate project for sale purposes
You hold the power of attorney from the
owner of a real estate property/project for
sale purposes
You are a public body who constructs or
owns the land with a real estate project for
sale purposes

4. 4 Colliers Flash | 08 June 2017 | Mumbai | Research | Colliers International
Source: Colliers International India Research
Get all the approvals and
commencement certificate
Submit documents & affidavit
before July 31, 2017
Deposit/advance can be only up to 10% before
entering into agreement of sale
Registration Rejected
Apply for registration
Registration granted
Get Login ID and Password
Create webpage on
authority website
Start advertising/ promotion/ sale
of project
Enter into agreement of sale
Provide all details to allottee
Provide quarterly update
Project Completion Non Completion
Extension of
registration
Revocation
Authority will decide on
fate of the project
Handover
{
The new real estate project cycle

5. 5 Colliers Flash | 08 June 2017 | Mumbai | Research | Colliers International
Table 5: Registration fees
Real Estate Project Real Estate Agent or
Promoter
INR10 per sq m of land
area, subject to minimum
INR50,000 and maximum
INR10 lakhs
- INR10,000 in case of an
individual
- INR1.00 lakh in case the
applicant is other than an
individual
Source: Colliers International India Research
Implication of non-registration
The provisions of RERA state that developers/promoters
cannot make a sale without registration of their project.
Buyers should also be aware that they cannot file a
complaint against developers who are not registered
before entering a sale agreement. Developers failing to
register by the end of July may receive a non-
compliance notice.
The act has also specified penalties for non-compliance
of registration norms for both the project and the agent:
> Real estate project: 10% of the estimated cost,
imprisonment of up to three years in case of
continued violation
> Real Estate Agent or Promoter: INR10,000 for
each day of default, may be extended up to 5%
of the project cost
"As per the market sources, the
MahaRERA authority has already
served notice to a real estate agent for a
misleading advertisement."
Although the real estate agent was registered, they were
fined a sum of INR 0.12 million for advertising an
unregistered project. This quick judgement from the
MahaRERA authority signifies a hopeful era of regulation
in the real estate sector.
Colliers' View
Since developers cannot make a sale prior to
registration, the number of launches has reduced to
minimum already. In Q1 2016, around 6,500 units were
launched but the number of launches dropped by 24%
with 4,900 launches in Q1 2017. However, as the
government is planning to adopt an online mechanism
for the approval process, the drop in new launches will
continue only for a short to medium term.
Overall, mandatory registration of the project and the
real estate agent should lead to reduced risk for the
consumer. Several buyers who are plagued with delayed
projects can now breathe a sigh of relief as they have an
option to seek justice from not only consumer courts but
also the regulatory authority. Hence, we expect that
RERA's implementation should help buyers to achieve
seamless transactions and avoid financial loss in
property investment.
A lot of panic has ensued among developers post
RERA's implementation, but we believe that being RERA
compliant is of prime importance to streamline the real
estate sector. We suggest that developers should align
themselves with all the RERA guidelines for a smoother
transition and share all the details regarding their project
on the MahaRERA website as soon as possible. We
advise the developers to start the process of registration
at the earliest to avoid any significant penalty and
business discontinuity. There is still a lot of uncertainty
on some RERA provisions, and they will only be
resolved once there is a precedent. Currently,
Maharashtra is one of the few states that have started
the application of RERA and we expect all the other
states to follow suit. However, it is very likely that the
implementation process and norms will differ. from state
to state.
For more information: Contributors:
Surabhi Arora
Senior Associate Director
+91 124 456 7580
surabhi.arora@colliers.com
Ravi Ahuja
Executive Director
Office Services & Investment Sales
+91 124 456 7571
ravi.ahuja@colliers.com
Amit Oberoi
National Director |
Knowledge Systems
+91 124 456 7571
amit.oberoi@colliers.com
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