The Haryana Real Estate Regulatory Authority (RERA), Gurugram, has issued a strict directive to real estate promoters across the state: comply with the mandatory annual report submission for under-construction projects within the next 30 days, or face a penalty of ₹5 lakh. This comes as a response to the repeated non-compliance with the RERA guidelines, particularly the failure to submit the annual reports, which are essential for ensuring transparency and accountability in the real estate sector. The warning from Haryana RERA underscores the importance of following the legal requirements set under the RERA Act, 2016.
RERA Haryana Takes Action Against Non-Compliance
RERA Haryana has expressed its discontent with the failure of many real estate promoters to adhere to the annual report submission requirement. Despite repeated reminders, numerous developers have yet to submit the mandatory reports for their ongoing projects. To address this issue, the RERA Haryana has issued show cause notices, instructing these promoters to comply within 30 days or face a ₹5 lakh fine.
The penalties are designed to enforce compliance and ensure that the promoters meet their obligations under the RERA Act. As per the directive from RERA Haryana, if the promoters fail to submit the annual reports within the given timeframe, a ₹5 lakh fine will be imposed. Furthermore, if the delay extends beyond 60 days, an additional fine of ₹10,000 per day will be levied. These escalating penalties demonstrate the seriousness with which RERA Haryana is handling non-compliance.
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The Importance of Annual Reports in Real Estate
Under the RERA Act, the annual report is a crucial tool for ensuring that developers are using funds appropriately and that construction projects are progressing as planned. By requiring promoters to submit these reports, RERA Haryana aims to increase transparency and accountability within the sector.
These reports serve multiple functions:
1.Financial Accountability – Annual reports ensure that funds collected for a specific project are used solely for that project. This prevents the diversion of funds to other ventures or personal interests.
2.Progress Tracking – The reports also help regulators track the progress of under-construction projects, allowing them to identify potential delays or financial mismanagement early.
3.Protection of Buyer Interests – For homebuyers, these reports ensure that their investments are being used as intended and that developers are adhering to project timelines and completion milestones.
What Does the RERA Act Say About Annual Reports?
The Real Estate (Regulation and Development) Act, 2016, aims to enhance transparency in the real estate sector while safeguarding buyers' interests. According to Section 4(2)(l)(d) of the RERA Act, real estate promoters are required to have their accounts audited by a certified chartered accountant within six months after the close of each financial year. The audit must ensure that the funds collected for the project have been utilized correctly and in proportion to the project's progress.
Non-compliance with this requirement is a serious violation of the RERA Act, and as per Section 60 of the Act, promoters who provide false information or fail to meet these requirements could face penalties of up to 5% of the estimated project cost. This serves as a significant deterrent against financial misconduct and reinforces the importance of adhering to the RERA guidelines.
Haryana RERA’s Strict Approach to Enforcement
Haryana RERA has made it clear that non-compliance will not be tolerated. Promoters who fail to submit their annual reports within the prescribed 30-day period will be penalized with a ₹5 lakh fine. If the reports are not submitted within 60 days of the show cause notice, an additional penalty of ₹10,000 per day will be levied. This two-tiered penalty structure is designed to encourage promoters to comply with the regulations swiftly.
For RERA Haryana ,these actions are a critical step in fostering a transparent and accountable real estate market. The ultimate goal is to ensure that promoters are held to high standards of financial integrity and that the interests of homebuyers are protected.
What Promoters Must Do
Real estate promoters must act quickly to avoid penalties and ensure compliance with the RERA guidelines. Here are the steps that promoters need to follow:
1. Submit Annual Reports on Time : Promoters must ensure that the annual reports for their under-construction projects are submitted within 30 days to avoid the ₹5 lakh fine.
2. Engage a Chartered Accountant : To meet the RERA Act’s requirements, promoters must engage a practicing chartered accountant to audit the accounts of their projects.
3. Ensure Proper Fund Utilization : Promoters should ensure that the funds raised for each project are used solely for that project and are aligned with its completion stages.
By following these steps, developers can ensure that they are complying with the RERA guidelines and avoid potential fines.
Why This Directive from RERA Haryana Matters
The directive issued by RERA Haryana is more than just a legal requirement; it is a step toward creating a more transparent and trustworthy real estate sector. The move will help address the widespread issues of financial mismanagement and project delays that have plagued the industry for years.
1. Transparency in Real Estate :The submission of annual reports ensures that all stakeholders especially homebuyers can have confidence in the financial management of the projects they invest in.
2. Buyer Protection : By enforcing these reporting requirements, RERA Haryana is safeguarding the interests of homebuyers, ensuring that their investments are protected and that developers are adhering to promised timelines.
3. Promoting Ethical Practices :The penalty system encourages developers to adopt better financial practices, reducing the risk of fraud and mismanagement.
Through this directive, Haryana RERA is also sending a message to developers across the country: compliance with regulatory guidelines is essential to fostering a healthy, credible, and sustainable real estate market.
The Role of RERA in Transforming the Real Estate Sector
RERA has already played a significant role in transforming India’s real estate landscape. The implementation of these regulations has forced developers to become more accountable, ensuring that projects are delivered on time and in compliance with legal requirements. Haryana RERA’s recent actions underscore the growing importance of such regulations.
The Authority’s decision to impose strict penalties for non-compliance with the annual report submission requirement is an important step in holding developers accountable for their financial and project management practices. This move will help restore confidence in the sector, encouraging more people to invest in real estate while ensuring that developers remain transparent and ethical in their operations.
Haryana RERA’s recent directive to real estate promoters is a critical move toward improving the state’s real estate sector. The mandatory submission of annual reports ensures that promoters are financially accountable and that homebuyers’ investments are safeguarded. By enforcing strict penalties for non-compliance, Haryana RERA is sending a clear message to the industry: transparency, integrity, and adherence to regulations are crucial for the sector’s growth and reputation.
Promoters must act promptly to meet the RERA guidelines and avoid penalties, while buyers can rest assured that the regulatory framework is in place to protect their investments. Haryana RERA’s firm stance is a step in the right direction for creating a more transparent, reliable, and trustworthy real estate market in the state.
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Ans 1. Haryana RERA has instructed real estate promoters to submit annual reports for their under-construction projects within 30 days. Failure to comply will result in a ₹5 lakh fine.
Ans 2. If the annual report is not submitted within 30 days, Haryana RERA will impose a ₹5 lakh penalty. If the report is not filed within 60 days, an additional penalty of ₹10,000 per day will apply.
Ans 3. The annual reports ensure that funds raised for a specific project are used appropriately and that the project's progress aligns with the funds and completion milestones.
Ans 4. Under Section 4(2)(l)(d) of the RERA Act, real estate promoters must have their project accounts audited by a practicing chartered accountant within six months after the financial year ends.
Ans 5. The RERA Act mandates transparency and accountability from real estate promoters, ensuring that funds are used for the intended purpose, and buyers’ investments are protected.
Ans 6. Under Section 60 of the RERA Act, promoters who provide false information or fail to submit reports on time may face penalties up to 5% of the estimated cost of the project.
Ans 7. It helps track the progress of construction projects, ensures proper fund utilization, and safeguards the interests of homebuyers by promoting transparency in the sector.
Ans 8. To avoid the fine, promoters must ensure that their annual reports are submitted within 30 days of receiving the notice from Haryana RERA, in compliance with the RERA Act.
Ans 9. Promoters are required to submit audited financial statements, project progress reports, and any other documents that verify the correct use of funds and project development status.
Ans 10. Compliance with Haryana RERA’s regulations ensures that developers build a reputation for transparency, reduces the risk of penalties, and enhances buyer trust, ultimately fostering a more stable and reputable real estate market.