Know more about RERA and its impact on Real Estate Industry and Home Buyers!
What is RERA?
RERA stands for Real Estate Regulatory Act, which came into force on 1st May 2017. It was first introduced by the Indian National Congress in 2013. In 2015, the Union Cabinet of India had approved 20 of its amendments and finally, it was passed by the Rajya Sabha and the Lok Sabha in March 2016. Under the Act, the central and state governments are required to notify their own rules with in less than six months on the basis of the model rules.
The main objective of RERA is to create transparency between the buyers and the real estate industry, to ensure the registrations of real estate projects with the state regulator and to protect the interests of the buyers. RERA being the first Indian Real Estate Regulator, let’s look into its features in detail.
Compulsory registration of new projects
For sustenance in the sector, all buyers are obliged to register with the RERA of the respective state. These include registrations of the properties having an area of more than 500 sq. metres or housing of more than 8 apartments. Once a property is registered, the developer is supplied with a unique registration number and a login ID with a password. A certified developer is able to sell his property to the buyers once the process is consummated. A penalty of up to 10% on project cost is to be paid or a 3 years life imprisonment is imposed if a person fails to register with the regulatory, paving no way for the illegal projects.
Monitoring the builders/developers
Developers cannot invite, advertise, sell, offer, market or book any plot, apartment, house, building, or invest in projects, without accomplishing the registration with the regulatory authority. Moreover, the number, type of apartments, plots and projects, and their completion status needs to be updated on the website; can be checked by the regulatory or consumers at their ease.
Safeguarding the consumer interest
It benefits and preserves the interest of the consumers by assuring the accountability of the money flowing to the realty sector. The builders do not have the authority to change the plan or pricing of the projects without prior consent from the consumers in a written document.
Authoritative State Regulatory
Each state in India has a RERA regulatory body to look into the transactional matters and maintain the financial transparency of residential and commercial properties.
No Delay in delivery
Buyers often complain about late delivery of the homes due to various factors, however, RERA has brought a solution to this problem. In case of the failure of the delivery within the specified time frame, builder needs to return the amount invested by the buyer along with the agreeable interest rate as signed in the contract.
Implementation of the bill has caused a prominent impact on the industry and the home buyers. Let us shed some light on it.
Real Estate Industry
- The builders or developers found violating the order of appellate tribunal could face a jail term and a fine.
- They have to park 70%of the funds to a dedicated bank account, known as the escrow account. The money will be withdrawn as per the stages of construction, authorised by engineers and chartered accountants of builders.
- The law prescribes penalties on developers who delay projects. In case of delays, the burden of paying the monthly interest on bank loans will lie on developers unlike earlier, when the onus fell on home buyers, thus increasing the cost of the project.
- The home buyers will have to pay less for the same house as the provisions of the act ensures them to pay the amount of the carpet area, i.e. the area within the wall and not of the built-up area which was to be paid before the enactment of the bill.
- There is no discrimination in buyers on the basis of caste, gender or religion. This will prevent the practice of building homes only for particular groups while rejecting others.
- Regulatory bodies and Appellate tribunals are present to solve the builder-buyer disputes within 60 days.
- The quality of construction has been improved due to a defect liability (warranty) period of 5 years. In case of any faults or glitches in the project, the buyer can contact the developer in writing within one year of taking possession to demand after sales services.
RERA brings in a lot of professionalism and accountability along with consumer activism. The pursuit of law has brought a paradigm change in the functioning of the Indian real estate sector. However, one needs to wait and understand the impact it will have in the long run. </div>