Imposition of Real Estate Act & Its Probable Impacts
RERA (Real Estate Regulatory Act), announced the previous year, was implemented in India on the 1st of May, 2017. This Act (both Development and Regulation) is thought to bring in essential accountability and transparency in the real estate sector: something that will ensure that customers aren’t tricked or cheated by the various developers across the country. RERA also takes the issue of late deliveries to the customers out of the picture.
This article pretty much tries to explain all there is to RERA and the most commonly asked questions. Read on:
How will the act be implemented?
69 out of the total 92 sections of this Act were verified and notified by the Ministry, thus ensuring its implementation from May, the 1st. The rules are to be formulated and laid down within the first 6 months of its implementation. The Ministry of HUPA (Housing and Urban Poverty Alleviation) will lay down the rules for all union territories but Delhi, for which, the Urban Development Ministry will be doing the requisites.
Next, one year from this date, the RERA authority will be established. This body will take into account and entertain the grievances and complaints from the developer’s and buyer’s end, in no more than two months. Till the point of time authority is finalised and set up, a designated officer will carry out the functions of the regulatory authority (interim). While a regulatory authority is already functional in Madhya Pradesh, other states such as Kerala, Mizoram, Haryana, Punjab, Rajasthan and Maharashtra have been designated interim authority.
RERA’s impact on homebuyers
Customers interested in buying a project that’s still either underway or unregistered will be better covered and protected, owing to this Act. Also, with both RERA and GST happening, the impact will be on prices as well but may take anywhere between half a year to even a full year to roll out properly. The buyer will only have to pay the price of the carpet area (the utilisable area confined to the walls) and not super built-up anymore. Another way it’s good for the buyer’s interests that will warrant the developer to transfer 70 percent of the proceeds to an escrow account (an account controlled by a third-party on behalf of the transacting parties). This ensures transparent and clean transactions since the builders will be able to withdraw the money and use it on other projects only after getting the necessary approval from the chartered accountants and engineers.
RERA’s impact on developers and builders
RERA bars promoters and builders from promoting or advertising any project without having obtained a RERA registration number and the specific website address. Failure in registration will take away their license to market and sell such projects. Essentially, different malpractices can be prevented because the developers will first have to obtain all the necessary approval before they sell their project. This Act also comes with a 5 year warranty period, within which, complaints concerning the quality or structural defects will have to be ironed out by the developers.