Real estate brokers fear state RERA rules will hit them
BENGALURU: Property brokers in Karnataka fear the Real Estate Regulatory Act (RERA) rules in the state will weigh on their business, which is already weak due to the slowdown in sales and demonetisation.
The RERA rules, notified in the state on Monday, have almost halved broker registration fee from what was mentioned in the draft notification. The fee for agencies has been set at Rs 2 lakh, down from Rs 5 lakh in the draft notification, while individual brokers are required to pay Rs 25,000 a quarter of what was notified in the draft. The fee has upset brokers as earlier, they were not required to pay any registration fee. Also, the charges in Karnataka are much higher than in some other states.
For instance, the registration fee in Gujarat and Uttar Pradesh is Rs 10,000. “Many honest brokers might not be able to arrange Rs 2 lakh, and being a proprietor, to save licensing fee exposes you to unlimited liability,“ said BM Pounacha, CEO, Real Estate Heroes, India’s first real estate coaching company. “It’s a catch-22 situation for brokers.Many may choose not to register and this would encourage cash payments. Finally, RERA has been brought in to help the end customer, right? Unfortunately, the current system of registration is similar to a wine shop licence.“
In Karnataka’s real estate sector, 80% are individual agents and the rest work with agencies. The state government has warned that violation of norms will lead to heavy penalty. “The only move for the industry is imprisonment or 10% cost of the project, both for the broker and the developer. The penalty is unfair as an agent makes 2% commission. The government has used the same yardstick as that for the developer,“ said Farook Mahmood, chairman, Silverline Group.
RERA aims to improve transparency in the real estate sector and protect homebuyers’ interests.Builders are expected to disclose project-related information including project plan, layout and government approvals-related information to customers.
“RERA and GST will make many brokers quit the trade as they do not have the bandwidth for statu tory compliance.It will filter the serious and the nonserious consultants and weed out unscrupulous business men,“ said Prashant Sambhargi, partner at Mars Pro perties, a Bengaluru-based brokerage. The Bangalore Realtors Association of India (BRAI) has expressed strong reservation over the registration fee and penalty for defaulters.
According to a report from Cushman & Wakefield, about 25,800 residential units were launched in the first quarter of 2017 in the country’s top eight cities, down 16% from a year ago, mainly due to implementation of RERA. In Bengaluru, 15,600 units were launched in the April 2016-March 2017 period, down 24% from the same period a year ago.
Also, many projects could not initiate construction and remained in the pre-launch stage due to delay in approvals.