RERA is Here to Ensure That Your Developer is Financially Sound
Jul 26, 2017 Real Estate News
A buyer does not need an expert knowledge making sure to do a background check on the developer, before investing in his project. The most important check is his financial background. A developer with a good cash flow will ensure that the project does not run into any financial trouble. A look at his past projects will give a clear idea as well.
To make it easier for the buyers and keep their faith intact, RERA makes sure that the developer has the financial ability to bear the cost of land and construction by himself. The law states that the developers will have to put aside the finances from the buyers, to mitigate the risk.
1. Regular Risk reviews:
The developers will now have to carry out periodic reviews which will ensure that the construction is being carried out timely with the promised quality and to find out any risk involved.
2. Tackling the cost in case of disaster:
If in case there is an unforeseen circumstance, the developers will have to assess its impact on the project and then plan it out depending on it.
3. Periodic audits:
The developers will have to carry out timely audits during the life cycle of the project to make sure it is going timely and smoothly.
4. Project Management officer:
Developers will have to hire a PMO for each project who will be responsible for ensuring the quality of the project, implementation of the proper construction practices, monitoring and reporting the quality of the of the project.
5. A customer relationship manager:
To manage and analyse the customer interaction and data, the developers will have to invest heavily. A CRM will be there to help the customer with any grievance.
6. Registration of a project:
The developer will have to put aside even during the application and registration of the project. In Maharashtra, the developer “shall pay a registration fee, calculated on the area of the land proposed to be developed at the rate of, Rs 10 per square metre, subject to a minimum of Rs 50,000, only and a maximum of Rs 10 lakh. The fees for registration of real estate project shall be paid through the NEFT or the RTGS system, or any other digital transaction mode”.
If the developer wants to withdraw from the registration of the project, it can be done before the end of 30 days from the date of filing the application. Some amount will be deducted as administrative charges while rest of them will be returned back.
7. Withdrawing from a separate account:
For new projects: three certificates need to be submitted one from the architect certifying the stage of completion, one from the engineer certifying how much the project will cost, and one from the CA certifying the cost proportion. The total cost of the project multiplies by such proportions will give the amount that can be withdrawn by the developer. After the occupancy certificate has been granted, the developer can withdraw the remaining amount.
For ongoing projects: 70 percent of the funds collected from the buyers shall be put into the separate escrow account which will be used to fund the current project rather than any other new project.
Besides these, the developer will also have to secure the funds from his own pocket or as a loan from banks and equity firms.
To make it easier for the buyers and keep their faith intact, RERA makes sure that the developer has the financial ability to bear the cost of land and construction by himself. The law states that the developers will have to put aside the finances from the buyers, to mitigate the risk.
1. Regular Risk reviews:
The developers will now have to carry out periodic reviews which will ensure that the construction is being carried out timely with the promised quality and to find out any risk involved.
2. Tackling the cost in case of disaster:
If in case there is an unforeseen circumstance, the developers will have to assess its impact on the project and then plan it out depending on it.
3. Periodic audits:
The developers will have to carry out timely audits during the life cycle of the project to make sure it is going timely and smoothly.
4. Project Management officer:
Developers will have to hire a PMO for each project who will be responsible for ensuring the quality of the project, implementation of the proper construction practices, monitoring and reporting the quality of the of the project.
5. A customer relationship manager:
To manage and analyse the customer interaction and data, the developers will have to invest heavily. A CRM will be there to help the customer with any grievance.
6. Registration of a project:
The developer will have to put aside even during the application and registration of the project. In Maharashtra, the developer “shall pay a registration fee, calculated on the area of the land proposed to be developed at the rate of, Rs 10 per square metre, subject to a minimum of Rs 50,000, only and a maximum of Rs 10 lakh. The fees for registration of real estate project shall be paid through the NEFT or the RTGS system, or any other digital transaction mode”.
If the developer wants to withdraw from the registration of the project, it can be done before the end of 30 days from the date of filing the application. Some amount will be deducted as administrative charges while rest of them will be returned back.
7. Withdrawing from a separate account:
For new projects: three certificates need to be submitted one from the architect certifying the stage of completion, one from the engineer certifying how much the project will cost, and one from the CA certifying the cost proportion. The total cost of the project multiplies by such proportions will give the amount that can be withdrawn by the developer. After the occupancy certificate has been granted, the developer can withdraw the remaining amount.
For ongoing projects: 70 percent of the funds collected from the buyers shall be put into the separate escrow account which will be used to fund the current project rather than any other new project.
Besides these, the developer will also have to secure the funds from his own pocket or as a loan from banks and equity firms.
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