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Gujarat RERA to penalize builders for pre-registration sales

To protect home buyers from being cheated, the Gujarat Real Estate Regulatory Authority (Rera) will take suo moto action and penalize builders engaging in soft launches or pre-Rera marketing and taking bookings without obtaining the mandatory Rera registration number.Many developers sell units at relatively low rates before they get Rera approval.

This contravenes Rera regulations, which stipulate that developers cannot sell such units. It also leaves the buyers vulnerable as they will not be given protection under the law.Rera officials, who have received complaints about these practices will monitor social media platforms for such activities.

A senior Rera official stated, “A developer cannot market a project before registering it with Rera. However, we have observed widespread instances where developers promote their upcoming projects without obtaining a Rera registration number. We are scrutinizing social media to identify such developers and have already issued notices.

“According to the act, violating Section 3, which requires prior registration before selling and marketing a project, can result in penalties of up to 10% of the estimated project cost. In 2021, we imposed a penalty of Rs 10 lakh on a developer for marketing a project in the GIFT City before obtaining registration to set an example.”

In some cases, developers have collected cash from investors or buyers by offering lower rates for the houses if bought before Rera registration.

“In the past few years, we have seen an increase in such activities. We have even come across cases where builders not only get cash but also cheques paid into accounts that are not registered with Rera because they haven’t received approval from the body. Some new builders, launching projects in competitive markets, offer cheaper rates to investors before obtaining Rera approval, mainly to secure liquidity for the project.

However, this has led to disputes with investors.” Another official noted,The official added, “People who invest in projects before Rera approval are forgoing the protection offered by the law in case the builder resorts to malpractices.”

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