Development cost or cost of construction of a project shall not include marketing and brokerage following the sale of apartments. According to a notification by the housing department uploaded on the website of Maharashtra Real Estate Regulatory Authority, "The development cost or cost of construction of the project shall not include marketing and brokerage expenses towards the sale of apartments. Such expenses though part of the project cost, should not be borne from the amount that is required to be deposited in the designated separate account."
According to Adv Sanjay Chaturvedi, an expert in real estate, brokerage has now come under RERA jurisdiction; a broker can approach the authority if his brokerage is due.
Every developer has to main a separate account where he deposits money that has to be used for the development of the project.
"The money in this account has to be used only for construction and purposes related to the development of the project. That means the money cannot be diverted for other things which include marketing," said Chaturvedi.
The notification further reads, "In case the transaction being executed by this agreement between the promoter and the allottee is facilitated by a Registered Real Estate Agent, all amounts (including taxes) agreed as payable remuneration / fees/ charges for services/commission/brokerage to the said Registered Real Estate Agent, shall be paid by the Promoter/ allottee/ both, as the case may be, in accordance with the agreed terms of payment."
Builders, though are wary. Rohit Poddar, Managing Director Poddar Housing and Development ltd says, "The decision to eliminate the marketing and brokerage expenses from the cost of development is a good move from consumer's point of view. However, it should be scrutinized whether it will have any direct impact on the prices for the end-consumers. Similarly, if customers do not purchase residential projects then who will pay for the project? In order to make a sale, advertising, marketing, and brokerage costs are a part and parcel of the project cost, and should be included as a part of project cost."
Vikram Mehta, a realtor said, "Earlier we would fight cases in different forums but would never get success if a developer had not paid us brokerage. However, with RERA covering brokerage we are sure that we will have an upper hand. Though the basic requirement is that we have proper documentation. This means we brokers should have broker documentation before dealing a home buyer or a developer."
