Real Estate Regulation Act (RERA) has been a landmark as far as the rights of home buyers are concerned. The Real Estate Bill was published in the official gazette on March 26, 2016 by central government. The bill may be considered as model law because 'Land' being state matter, the states are given flexibility to modify/add their own set of rules. The law came into effect in May 2017, and various states have been forming their state bodies. The act has provided a shield for the buyers in the wake of delayed delivery of projects. Now home buyers can be assured that a RERA-registered property will be a safer bet and their hard-earned money will not go down the drain. For obvious reasons, they prefer RERA-registered projects over those projects that have not been registered with the RERA authority. RERA has been created to ensure accountability towards the buyer and developers, protect consumers' interests, ensure fair play and reduce frauds and delays. The objective of this law is to instil transparency in the sector which is needed for the overall improvement in investor's confidence and to encourage greater institutional capital inflows into the sector. RERA is likely to add to buyer confidence as they are expected to feel more in control/aware of any changes in their project. With RERA being implemented across the states, developers are likely to focus on the timely delivery of their ongoing projects and also remain increasingly flexible on pricing and payment structures.
Before RERA came into action, home buyers were unsure while investing in a project. Earlier, they did not have a point of contact to check the progress of project invested in. Also, there was no redressal mechanism for either delay in obtaining occupancy certificates/possession of the project. RERA has taken care of these issues and infused a lot of transparency in the system. It will boost consumer confidence in the sector.
The Act will also try to protect the interest of consumers ensuring speedy redressal of disputes which will help gain confidence amongst the buyers. The provision of mandatory registration and requirement of keeping 70 per cent of the project money into an escrow account is likely to reduce the buyer risk to a certain extent: this will ensure that developers are not able to invest in numerous new projects with the proceeds of the booking money for one project, thus delaying completion and handover to consumers.
The provisions of promoter's liability for clear title, inclusion of real estate agents under the purview of Act and penalty clauses will increase the overall transparency and accountability in the system.
Also, one of the major benefits for home buyers from RERA-registered projects is that if the project completion is delayed the developer has to pay the same interest as the EMI paid by the buyers.
This will enable the government to oblige the developer to stay loyal to their customers. With RERA, there is a mandatory disclosure of project details, including those of the promoter, project, land status and clearances which increases the credibility of developers and protects consumer rights as well. Home buyer confidence is now set to increase on the back of these sentiment-building measures of the government.
Buying a Home?
1. Always ensure that the developer you are dealing with is registered with RERA.
2. Whenever you consider purchasing a property now onwards check about the project details on the regulator's website (URL?)
3. After notification, only RERA registered commercial or residential projects can be sold or marketed.
4. As per RERA, the real estate developer needs to keep 70 percent of the amount collected from the buyers in designated account created for the project. The developer will use this fund in designated account only for construction activities of the project. This provision will greatly help in timely completion of the project as the chances of diversion and mis utilization of buyers' funds get reduced considerably.
5. Obtaining all the required approvals before launching of the project is mandatory now. So, no more delay on the pretext of obtaining approval on 'closure' of the project.
6. Any structural defect within five years from the date of possession should be rectified by the developer.
7. Any structural change would require the approval of 2/3rd of the buyers.
8. Delay in project from the developer side shall attract penal interest.
9. According to RERA, real estate developers should sell projects based on carpet area which a buyer is going to use.
10. Developer shall provide all project details on RERA site and also construction updates/booking status periodically.
11. With state regulatory bodies as appellate tribunals shall resolve disputes between builders and buyers within stipulated time. Buyers will be free from the trauma of years-long cases that only prolonged the delivery of homes.