To clear the air on real estate developers issuing advertisements for their projects, the government has said that no ongoing or future projects can be advertised without registering them first with the new Real Estate (Regulation and Development) Act (RERA) regulator.
Realtors' body National Real Estate Development Council (NAREDCO) had submitted a representation to the Ministry of Housing and Urban Poverty Alleviation seeking clarity on advertisement and sale of the ongoing projects amid conflicting reports and interpretations on the issue.
"Section 3 (1) of the Act prohibits advertisements for all projects (ongoing/future) without registration with the real estate regulator. This provision has come into effect from May 1, 2017," the ministry said, in response to Naredco's letter.
Reacting to the housing ministry's reply, NAREDCO President Parveen Jain said the prohibition on advertisements and sale in the ongoing projects will hit the industry, comprising over 76,000 companies.
The rules stipulate that each advertisement showcasing a project has to display the RERA registration number.
The ministry's clarification is likely to further dampen an already subdued real estate market that has seen no real appreciation in value of property or sales growth during the last few years. The implementation of RERA on May 1, 2017, has had a negative impact on the marketing budgets of real estate firms in a huge way.
As per the Act, Section 3 (1) specifies that "no promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building..., in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act."
The section stipulates that a promoter should apply to the regulatory authorities for registration of the project within three months ending July -- the time of commencement of the Act. All 92 Sections of the Act effect have come into effect, following the real estate law coming into effect on May 1.
In the first case of penalty being imposed under RERA, a Mumbai-based real estate consultant firm was recently fined Rs 1.2 lakh for a misleading advertisement of an ongoing construction project.
According to media advertising and marketing website Exchange4media.com, this has further cast a negative spell on the fraternity who do not want to take any risk before reworking their marketing strategy.
