Curbs on pre-launch offers, vigil on social media too

Telangana RERA chairman Dr N Satyanarayana

Dr N Satyanarayana, Chairman of the Telangana RERA, expressed his determination to revitalise the real estate sector. In an interview with Real Estate Guru on Friday, he advised potential home buyers against purchasing flats in projects that have not been approved by RERA, just because the price is low. He issued a stern warning to realty venture promoters and developers, stating that strict legal action will be taken against those who sell plots and flats without RERA permission. He emphasised that even after getting a warning if they fail to comply, the authorities will not hesitate to ensure imprisonment. Read the exclusive interview with the Real Estate Guru for more insights.

Q: Congratulations on your appointment as the Chairman of Telangana State RERA. What are your duties and responsibilities according to this law?

Ans: The primary objectives of the Real Estate (Regulation and Development) Act 2016 are to regulate and promote transparency in the real estate industry, particularly in the sale of plots or flats, with a focus on protecting home buyers. This law applies to development of layouts and flats within the purview of Gram Panchayats, Municipalities, Corporations, and Urban Development Authorities for plots measuring above 500 sq.yards. One should not sell them without obtaining RERA approval.

Prior to the enactment of this law, some promoters used to promise one thing but deliver something else. However, such practices are no longer permissible.

Under this act, construction must adhere to the details provided during project registration, and advertisements should accurately reflect this information. Buyers’ payments are to be deposited in a separate escrow account, with 70 percent of the funds reserved for the construction of the designated project. Regular updates on the construction progress should be reported every three months. Withdrawals from the escrow account require the signature of a licensed engineer, architect, or chartered accountant, and non-compliance with these rules can result in penalties by the RERA authority. Providing false information can lead to legal action as well.

Any changes or additions to a project after obtaining RERA permission must be approved by a two-thirds majority of the buyers followed by RERA approval. Additionally, if a project’s completion deadline is extended beyond the initial three years, valid reasons must be provided by developers to avoid potential action against them.

Real estate agents are also required to be registered with RERA to engage in transactions. Buyers are advised to make timely home payments to avoid fines. The RERA Adjudicating Officer can impose penalties if a promoter causes delays in the project’s completion.

Q: What plans have you formulated to enhance the RERA during your five-year tenure as its Chairman?

Ans: Upon establishing RERA, MA&UD Minister KT Rama Rao emphasized on the well-planned development of Telangana State. The introduction of the Telangana Municipal Act 2019 consolidated laws pertaining to municipalities and corporations. This legislation focuses on making decisions that benefit the people. As a result, the TS-bPASS is being introduced, granting immediate permission to houses under 500 square meters, and also allowing apartments to be deemed part of a single window process. Minister KTR has consistently advocated for user-friendly procedures for both buyers and builders. To achieve this, the government has studied best practices from various other metro cities by conducting visits to six such cities and plans to compile a comprehensive report for their assessment. The aim is to approach all aspects of RERA systematically and ultimately ensure a hassle-free experience for both buyers and promoters.

Q: After 2018, there was a rise in pre-launch offers in Hyderabad. Unfortunately, certain scams like Sahithi and Jaya Group came to light. If you are familiar with these incidents, can you extend any assistance to the victims affected by such fraudulent activities under the RERA Act. Are these cases within your jurisdiction to address and offer support?

Ans: After the implementation of the RERA Act, there is an absolute prohibition on pre-launch offers. Any promoter initiating a project must obtain permission from RERA and the local authorities; otherwise, it is illegal and considered an offence. Stringent action will be taken against those who begin projects without complying with RERA regulations.

I urge flat and property buyers not to be swayed by offers like pre-launches, UDS (Undivided Share), or expressions of interest (EoI), regardless of low price and get into trouble later. It is essential to invest in properties that are RERA-approved and verified projects. To ensure compliance, a dedicated team will be formed to identify and take strict legal action against such promoters who violate RERA guidelines.

Q: What is your stance on builders who do not comply with the RERA rule of uploading project updates every three months? Will you change this rule?

Ans: A valid observation has been made regarding the construction project. I have extensively studied similar projects in other states as well. Builders are required to submit reports online every three months, ensuring transparency and monitoring progress. Failure to provide accurate information will result in legal consequences. A penalty of five per cent is applicable for any delays or inaccuracies. Therefore, it is crucial to keep all stakeholders informed about the project’s advancements.

The construction work must adhere to the predetermined schedule set by the builders to ensure timely completion. Regular reports are essential every three months to verify that construction is progressing as planned. Builders cannot complete the project all at once, and if the work extends beyond the stipulated timeframe, buyers have the right to file complaints with RERA (Real Estate Regulatory Authority). Hence, it is imperative for builders to include these reports as part of their practices.

We are currently devising a mechanism for this purpose. In the near future, we aim to send two SMS alerts to the buyers, notifying them of important updates. This provision will be introduced within a month, utilising modern technology for effective communication. By providing alerts based on the developer’s report, we ensure that buyers are well informed. Further, we will take appropriate action to minimise any inconvenience faced by individuals involved in the project.

Q: Sending SMS to buyers is a good idea, but if the realty sector is to grow in Telangana, pre-launches should be curbed. What strategy do you have in this regard?

Ans: The real estate sector different from other industries due to its close connection with society, the economy, and the environment. Its growth directly contributes to economic growth, considering it accounts for around nine per cent of the domestic GDP. Notably, the real estate sector offers substantial employment opportunities, second only to agriculture. It plays a vital role in providing housing for various segments of the population and ensures essential infrastructure like roads, drainage, water supply, street lights, waste management, and green spaces are in place for comfortable living. Social infrastructure, such as schools, colleges, hospitals, and recreational facilities, is also developed as part of the realty sector’s contributions.

Further, the commercial aspect of the realty sector encompasses shopping malls, multiplexes, warehouses, office spaces, and more, indicating its interconnectedness with numerous industries. In light of this, it is of utmost importance that builders strictly adhere to the law and refrain from engaging in prelaunch and UDS sales, which may be illegal or unethical practices. Similarly, buyers should exercise caution and not make purchases solely based on price considerations. Violation of these guidelines will lead to legal consequences. To protect home buyers, it is strongly advised not to invest in areas that are not approved by RERA.

Q: How do you plan to prevent the illegal sales of plots and flats in pre-launch using Facebook, YouTube, and Instagram?

Ans: We are taking strict measures in this regard. A dedicated IT wing is being established to monitor announcements related to UDS and pre-launch properties on social media platforms regularly. Additionally, we have received grievances from government employees who purchased properties from Jaya Group, and are facing difficulties after obtaining bank loans with their hard-earned money. Hence, we are actively addressing such issues constantly. Potential buyers are strongly advised to avoid purchasing properties in pre-launches and not become victims of such scams.

Q: Some big builders are selling flats under the guise of “Expression of Interest” without obtaining permission from RERA. Can such properties sold under RERA regulations? Can they accept cheques from buyers with the intention of depositing them later, once they obtain RERA approval? Is it possible to collect these cheques without obtaining the RERA approval? What is your take on this issue, and what advice do you offer to builders who engage in such practices?

Ans: Those who engage in this practice are entirely liable for punishment. Accepting cheques under the guise of “Expression of Interest” is not permissible in any manner. Therefore, builders should refer to Section 3 and only accept cheques after obtaining the necessary RERA permission. Otherwise, they will be subject to legal repercussions.

Q: Certain RERA agents are involved in selling properties in ventures without necessary RERA approval. How do you plan to handle such individuals?

Ans: Under the RERA Act, real estate agents must be registered with the authority, by paying a registration fee of Rs. 10,000. These registered agents can engage in the real estate business for up to five years, but they are not allowed to sell plots or flats without RERA approval. In case of any complaints against these agents, we will issue notices and even impose to a fine of five per cent of the plot or flat’s value. Additionally, legal actions will be initiated against them. Therefore, it is essential for agents to obtain RERA permission, and sell properties located in only RERA-approved ventures.

Q: Recently, some YouTube channels are releasing videos related to projects which do not have RERA permission. Flats are being sold at low rates in the name of investment options. What action do you take against such YouTube channels that are violating RERA regulations?

Ans: We are exploring this matter seriously. Anyone placing advertisements anywhere without our permission will definitely face action. We are focusing on social media. When there is a law, it is the responsibility of everyone in the society to respect it. It is not correct to publicise about a project to people without RERA permission. Such people are not only harming themselves, but also others who watch such videos. We will take appropriate action against those involved in such advertisements. A fine of ten per cent of the project value will be levied. If you don’t listen, we will also impose three years imprisonment. Note that in some cases both are required.

Q: Is it permissible for any media, whether print, television or digital, to publish advertisements for real estate projects which do not have RERA permission? How do you plan to address the issue of advertisements lacking a valid RERA number?

Ans: My appeal to everyone is to ensure that any advertisement they publish must include the RERA number without fail. Failure to do so will result in penalties under Section 3. We have noticed that some individuals are placing advertisements with incorrect or non-existent RERA numbers, and we are currently gathering information district-wise, including Hyderabad, to address this issue.

Q: What are the legal implications of selling land in ‘guntas’ without RERA permission? To what extent is it valid to sell agricultural land with 40 feet roads like a layout? How would you react to this unauthorised practice?

Ans: Buyers can purchase land in ‘guntas’ for agricultural purposes, without any hestitation. RERA has no role in such transactions. However, if agricultural land is being used for non-agricultural purposes like developing layouts, constructing buildings, commercial complexes, develop social infrastructure or a factory, RERA permission is mandatory. Even if someone wants to construct anything on their land, they must obtain permission from local authorities. Additionally, they also must obtain approvals from local authorites to convert agricultural land to non-agricultural purpose. We have observed some cases of fraudulent practices involving the sale of layouts under false pretences, and we advise buyers to be cautious. The government has issued a circular stating that registration of land less than 20 guntas is not allowed. Though they can register the land, there is no guarantee for buyers’ money. Anyone encountering such practices should report them to the local authorities. If real estate ventures are made without obtaining RERA permission, a fine of ten per cent of the project value will be imposed, in accordance with the law.

Q: Recently, some promoters in Hyderabad have been luring the general public with promises of high interest on commercial property investments. They claim that by investing Rs 20 lakhs, one can receive Rs 20,000 per month as rent, and if you invest Rs 50 lakhs, you’ll get Rs 50,000 per month. However, it seems that these promoters are not following the RERA regulations. Don’t these promoters need RERA permission?

Ans: Many individuals are considering investing in commercial projects as they offer higher returns compared to traditional bank deposits. While it is true that higher returns are possible, it’s important to note that such returns are dependent on the natural development of the economy and cannot be guaranteed. Sales of any such properties cannot occur without proper registration with RERA. It’s crucial for builders to refrain from engaging in unethical practices and respect the law. Complying with RERA will earn them respect and prevent interference from other agencies. The RERA permission process usually takes about a month, but efforts are being made to expedite it, aiming to issue it within a week to ten days. Online applications and the introduction of a QR code system are being explored to streamline the process.

Q: Finally, what advice or suggestions do you have for builders, realtors, and agents to ensure the smooth running of the real estate industry?

Ans: Chief Minister K Chandrasekhar Rao, consistently emphasizes the importance of moving forward in a well-planned and transparent manner when exploring new endeavors. Accountability should be a priority in all our actions. Minister KTR suggests that we should focus on developing the real estate sector to achieve better results compared to other industries. Since this sector is sensitive, it is essential to promote growth in a sustainable environment. In accordance with their recommendations, we are committed to strengthening RERA in Telangana state in a constructive manner.

In the real estate sector, individuals like promoters, developers, and land-owners play a crucial role. If they operate responsibly, a significant number of people, including local and foreign investors, will invest in their ventures. Conversely, any mistreatment of people will result in a loss of trust automatically. Our goal is to ensure that incidents like Sahiti and Jaya Group do not reoccur in the state. We always support those who contribute positively to the real estate sector. Wrongdoers must face legal consequences. Real estate agents must be registered. We urge buyers to invest in plots and flats only in RERA-approved projects.