Lenders and investors wary of real estate regulation act

By Nupur Singh and Jyotika Bajaj, SNG & Partners
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Having been in a state of slumber for a while, the real estate sector is expected to gain some confidence with the introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA). While consumers have seemingly been provided adequate protection under RERA, real estate developers seem to be troubled by the act.

However, it is not just the real estate players but also the lenders to this industry, especially where such lending is in form of investment, which are likely to be impacted. Some legal aspects of RERA which may have an impact on lenders/investors catering to the real estate industry are evaluated and analysed below.

Nupur Singh, Partner, SNG & Partners
Nupur Singh
Partner
SNG & Partners

Foremost is the condition prescribed under RERA which requires the promoter (being the developer) to deposit 70% of the amounts realized from allottees in a separate project bank account, thus blocking the receivables. Further, RERA stipulates that the promoter can withdraw amounts from this account only upon certification from professionals like an architect, engineer or chartered accountant that such withdrawals are in proportion to the completion of the project.

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SNG & Partners has offices in Delhi, Mumbai, Singapore and Doha. Nupur Singh is a partner and Jyotika Bajaj is a senior associate.

SNG & Partners

One Bazaar Lane, Bengali Market

New Delhi – 110001
India

Contact details:

Tel: +91 11 4358 2000

Fax: +91 11 4358 2033

Email: info@sngpartners.in

Website: www.sngpartners.in

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