The COVID-19 pandemic has halted industries and businesses throughout the world. The real estate industry which is one of the top contributors to GDP and creators of employment in India is also at a standstill.
With the implementation of the RERA Act in 2017, all ongoing and new real estate projects across the country were required to be registered with respective State RERA Authorities. As on 07th April, 2020, total 51,809 real estate projects have registered under RERA. Nearly 50% of these projects have been registered in Maharashtra. Gujarat, which has the second most projects registered in India, has registered 6904 real estate projects.
In the current situation, many of the state RERA Authorities have provided relief to promoters of real estate projects by extending the registration of real estate projects and/or waiver of the fees for extension of registration.
This article attempts to discuss the provision, related to extension of real estate project under RERA with rules framed by Gujarat Real Estate Authority (GujRERA), relief provided by the GujRERA and its comparison with the relief provided by the Real Estate Regulatory Authority of other State/UT.
Q 1. What is the provision of RERA for extension of Real Estate project?
Ans. As per provision of Section 6 of RERA, The Real Estate Regulatory Authority may extend the registration of real estate project due to force majeure.
Q 2. Is promoter required to make application for extension of registration?
Ans. Yes, Promoter has to make any application for extension of registration along with the fees.
Q 3. What is the force majeure?
Ans. Force majeure” shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.
Q 4. Is COVID-19 covered under the definition of force majeure?
Ans. Yes, COVID-19 has been described as “threatening disaster situation” and meaning of ‘disaster’ is considered as a calamity under RERA.
Q 5. What is provision related to the time limit for extension of registration?
Ans. As per Section 6 of RERA, extension of registration can be granted for maximum one year.
Q 6. What is the fees structure for extension of registration?
Ans. As per Rule 7(3) of Gujarat Real Estate (Regulation and Development) (General) Rule, 2017, the fees payable for the extension of registration is 50% of the fees payable at the time of registration of Real Estate Project.
Q 7. Does GujRERA has a power to waive the fees for extension of Registration?
Ans. Yes, as per proviso to Rule 7(1) of Gujarat Real Estate (Regulation and Development) (General) Rule, 2017, the Authority may waive the fees if the application for extension of registration is made due to Force Majeure.
Q 8. What is the step taken by the GujRERA for providing the relief, to real estate developer, from the effect of COVID-19?
Ans. GujRERA has issued Order No. 33 dated 13.04.2020 to provide Relief for mitigation of COVID 19 pandemic and Lockdown implications.
Q 9. What are the relief provided by the GujRERA?
Ans. GujRERA has provided the two type of relief:
a. Project End Date-Extension Application Fee Waiver
b. Project Registration Alteration Application Fee Waiver.
Q 10. Have all projects been given blanket fee waiver for Project End Date Extension?
Ans. In this category of relief GujRERA has divided the real estate project in two categories:
a. Project with end date before 31.03.2021
b.Project with end date after 31.03.2021
Q 11. What is the relief given to the project which are going to complete on or before 31.03.2021?
Ans. Real Estate project for which project end date (i.e. completion date) is on or before 31.03.2021 are allowed to make one-time application, for extension of registration, without any fees.
Q 12. What is the relief given to the project which are going to be completed after 31.03.2021?
Ans. There is no specific relief provided, application for extension of registration are allowed as per provision of the RERA with fees prescribed.
Q 13 . Is there any procedure to be followed for extension of Registration?
Ans. Yes, as per the Order, issued by GujRERA, application to be made along with necessary documentation demonstrating the latest progress status on the basis of which, Gujarat RERA can grant extension within the provisions of the act.
Q 14. What is the last date for making the application for extension of registration with waiver of fees?
Ans. There is no last date is specified to make the application, as per order issued by GujRERA “Promoters may opt for such relaxation by applying for extension before their project End Date”. Hence, it is required to me made before the end date (i.e. before 31.03.2021)
Q15. What is the order of GujRERA with respect to relief of “Project Registration Alteration Application Fee Waiver”?
Ans. In this category of relief GujRERA has allowed all the projects with multiblock development plan to revise the development plan and apply for alteration of the project according to revised plan.
Q 16 . What is the specific relief given for alteration of the project?
Ans. GujRERA has waived the fees payable on alteration application made with reference to the order issued on 13.04.2020.
Q 17. What is the general/normal fees structure of the project alteration application?
Ans. In case of project alteration application, promoters are required to pay the fees equivalent to the fees payable at the time of registration of real estate project.
Q 18. If a real estate project has 5 blocks (i.e. A,B,C,D and E) and the promoter does not currently wish to construct 2 blocks D and E, how will the alteration be made?
Ans. In this case, the promoter can apply for alteration with any of the two options:
a. Divide the phase into 2 phases. Alteration application shall restrict the full project to Phase 1 only.
b. To develop Blocks A, B, C and to cancel the development of blocks D and E.
Q 19. What relief is provided by GujRERA if the project is developed in 2 phases?
Ans. Promoter is not required to pay the fees for alteration application for dividing the project in 2 phases and entire project registered initially shall be altered to Phase 1 project without fees. However, to develop the Phase 2, the promoter has to make a fresh application for registration along with the necessary fees.
Q 20. How many States/UT Real Estate Authority have given relief to the real estate developer?
Ans. Currently, Maharashtra, Karnataka, Gujarat and Uttar Pradesh Real Estate Authority have given the relief due to impact of COVID-19
Q 21. What are the relief provided, by other States/UT Real Estate Authority, in respect of Extension of registration of project?
Ans. Maharashtra, Karnataka, Uttar Pradesh Real Estate Authority have extended the registration period of all the projects with end date after 15.03.2020 by 3 Months.
Q 22. What is the procedure to be followed by the promoter in the other stated/UT, for extension of registration of real estate project?
Ans. Promoters in the Maharashtra, Karnataka and Uttar Pradesh are not required to submit any documents or apply for extension. The extension of registration is granted by the Authority by exercising Suo Moto powers.
Analysis and Comparison of relief provided by the various State Real Estate Regulatory Authority:
The GujRERA has granted the relief to real estate project by waving the fees for Extension and Alteration of the real estate project. The order issued by GujRERA has divided the real estate projects in two categories i.e. project which will complete on or before the 31.03.2021 and project which are going to be complete on or after 31.03.2021. Only projects with end date before 31.03.2021 have been granted relief of fee waiver for extension in Gujarat. However, there is no such bifurcation done by the other states/UT Real Estate Regulatory Authority. A blanket exemption means all projects with end date after 15.03.2020 have been given extension without application or fees.
GujRERA has allowed the promoter to make self-analysis of the impact of COVID-19 on the project and thereby apply for extension or alteration of the project if required and for the time required up to a period of 1 year. While in the other states, the registration is extended without making the application by the promoter by a fixed amount of time i.e. 3 months. This essentially puts all projects with different size, locations, timelines and types into the same bracket and gives a blanket exemption assuming the impact of COVID-19 to be of just 3 months. A plotting project in Sholapur nearing completion shall have a different impact of COVID-19 situation against a 100-storeyed residential project in Borivali.
However, it is pertinent to note that promoters in other states may be able to apply for further extension of 1 year for a project under Section 6 over and above the 3 months already provided. However, in Gujarat, since the application for extension by the promoter is already being made in Section 6, the Authority in the future might not be able to grant further extension, if required to a project which has already requested 1 years’ extension due to COVID-19 situation.
By analysis of the all above relief provided by the various real estate authority, it seems that in case of GujRERA, while it may increase the administrative work on the part of Authority as well as promoter, the Order allows an objective assessment of impact of COVID-19 on each project and treats each project unequally. However, the projects with end dates after 31.03.2021 seems to have missed the bus and fee no relief has been granted for extension. When migrant labour is expect to return after monsoons and supply chain completely hampered will projects with end dates in say April 2021 not be delayed?
The option for project alteration given by GujRERA shall have a huge positive impact for the promoters. No such relief is provided by any other Authority. It gives the promoter to go back to the drawing board and rethink the project in light of these unexpected hanges. However, it does raise a few questions such as – while deregistration of one part of a project, will consent of 2/3rd of allottees of other part of project not deregistered be required?
Conclusion: Steps taken by the various Real Estate Regulatory Authority is a welcome move and a relief for the real estate industry which was already reeling under pressure due to the economic slowdown and now COVID-19. However, the impact on the Home Buyers due to such extension cannot be ascertained at the present time.
CA. Sarthak Bhansali is a practicing Fellow Chartered Accountant and a RERA Expert. He is qualified LLB and FCA. He practises in the name of M/s S S Bhansali & Co and area of expertise is real estate laws. He can be reached at [email protected]
CA. Manan Doshi is a fellow Chartered Accountant. He specialises in advising clients on RERA. His firm is engaged in providing Advisory exclusively to Real Estate Developers. He is partner with Doshi Bhimani & Associates LLP. He can be reached at [email protected]
CA. Mahadev Birla is RERA consultant and has been ex-senior executive for real estate company for 6 years. He appears regularly before RERA Authorities & Tribunal. Also, has many landmark cases to his credit and can be reached at [email protected]