Why higher registrations fee under RERA a problem for Bangalore

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Severely hit by the Central Government’ demonetization policy, the real estate in Bangalore has something to worry about. Under the state Real Estate Regulatory Act, the builders in Bangalore fear a major hike in registration fee. The new draft demands a registration fee of Rs 5 lakhs. The brokers work for 2 per cent commission.

 

 

After the announcement of the RERA, there is hope among the real estate buyers. RERA is geared up for transparency in the commercial and residential projects in Bangalore. The Real Estate Bill includes the need to address the outrage of the customers against the errant builders. Brokering is a highly paid business in Bangalore. Currently, the real estate in Bangalore is panic-stricken. The issues with the new policy initiatives are:

 

 

  • Higher Registration fee- According to this RERA draft policy, the brokerage firm is expected to pay a registration fee of Rs 5 lakhs in the Bangalore city and Rs 2.5 lakhs in the rural parts. The question is why the registration fee is high in Bangalore. However, the registration fee is much lower in the states of Gujarat and Uttar Pradesh.

 

  • A concern about the penalty charge: The real estate broker community in the city has a big concern that there is a proposed penalty for the defaulter builders. There will be a penalty of 5% of the total unit cost for the erroneous projects. Currently, 160 brokers are registered in Bangalore city and few are unregistered. The agent’s role is just to facilitate the sales of the apartments in Bangalore and bring the potential customers together. The developers feel that it is irrational to hold brokers guilty for a default committed by the developers.

 

It is a big challenge for the brokers, as it will hit the brokerage business in the near future. If the brokers have to pay a penalty of 5% on an income of 2 % then, their survival is a question.