After facing setbacks due to disruptions caused by the Covid-19 pandemic, the real estate sector is making a comeback, with Haryana’s Real Estate Regulatory Authority (RERA) taking action against property dealers, real estate agents, and brokers engaged in charging exorbitant commissions from both property buyers and sellers. In a landmark move, RERA has imposed a cap on the commission charged by brokers for facilitating land deals. As per the new order, no real estate agent in Haryana is allowed to charge more than 0.5% commission from both the buyer and the seller in each deal. This decision aims to curb malpractices in the real estate sector.
The order specifies that for registered real estate projects, RERA restricts promoters and brokers from charging a commission exceeding one percent of the agreed consideration value, to be equally split between the seller and the buyer (0.5% each) upon finalizing the deal. This one percent commission aligns with the regulations set forth in the Haryana Regulation of Property Dealers and Consultants Rules and the Haryana Regulation of Property Dealers and Consultants Act.
However, the applicability of this order is limited to property dealers and real estate agents registered under the Haryana Regulation of Property Dealers and Consultants Act, 2008. Those operating without valid registration will not be subject to this regulation, although unregistered individuals acting as agents may face penal action if reported by a buyer or seller to RERA.
In the majority of land deal cases, commissions are often accepted by property dealers and agents in cash, with no official records issued. RERA faces challenges in detecting arbitrary commissions when no receipts are provided. While the order emphasizes the mandatory issuance of receipts for cash transactions, buyers and sellers have the right to request receipts for commissions charged.
The order seeks to crack down on unregistered property dealers through field units monitoring advertisements and signboards. RERA has also urged promoters to provide details of all brokers in prospectuses and advertisements to prevent unauthorized brokers from engaging in malpractices.
Violators of RERA’s directives may face penalties or imprisonment, depending on the severity of non-compliance. Brokers are required to maintain relevant documents, including approvals, plans, specifications, and brochures for projects they facilitate deals on. Failure to comply with these regulations could result in penalties, including the cancellation of registration.
In mega projects, brokers often profit by inflating unit prices through bulk allocations from builders to various brokers. The extra money is then shared between the broker and sub-broker as part of the commission. This practice is illegal under The Real Estate (Regulation and Development) Act, 2016, which stipulates that only project promoters can develop and market real estate projects.
As of the latest data on RERA’s website, there are 1,319 registered property dealers and real estate agents in Haryana, with registration valid for a period of five years. After this period, agents must renew their registration.
