With an intention to guard consumer interest and to bring effectiveness and transparency into the country’s real estate sector, the Government of India implemented the RERA Act nationwide on May 1 this year.
The RERA Act is meant to address the grievances of property buyers who at times are cheated by developers on delay in delivery of under-construction properties, finishing of said project plans, authenticity of properties, etc., and is being touted as pro-consumer law.
What is the Real Estate Regulation Act (RERA)?
The Real Estate (Regulation and Development) Act, 2016 is an Act of the govt of India which seeks to guard home-buyers as well as help improve investments in the real estate sector.
The bill was approved by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016. The Act came into force on 1 May 2016 with 59 of 92 sections notified Remaining requirements came into force on 1 May 2017.
The Central and state governments are liable to notify the Rules under the Act within a statutory period of six months.
RERA Act specifies certain norms for building and devlopment of real estate which will boost the transprancy in the transaction in the real estate sector.
It has empowered home buyers with several rights and laid certain regulations as well to be strictly to be followed by builders so that home buyer are not cheated anymore .
10 Major Benifits of Real Estate Regulation Act (RERA)
#1 Establishment of Authority for Complaint Redressal.
Under RERA Act any grievance against developer/builder can be taken to the state authority set up under RERA, which shall have the power to resolve the grievance. Any person not satisfied with the order can file an appeal with appellate tribunal who will then resolve the grievance within 120 days .In case of failure to do so, it shall record the reason of such failure.
#2 Right to information-RERA Act
The buyer will have acess to all the project related infromation , be it plan layout,execution plan, material used , progress report satge wise etc.
#3 Protection against any defect in the construction.
The quality of the building has been a worry for several buyers. Under RERA, any structural defect that takes place to the property for up to five years from the date of handing over possession will have to be repaired by the developer. It shall be the duty of the promoter to rectify such defects within 30 days without further charge.
#4 Builder wont be able to delay project delivery date.
Under RERA, not being able to get possession of apartments from the builder won’t be a problem anymore.If builder fails to deliver the project on time buyer will has following options
- To withdraw from the project, wherein he shall be entitled to get full refund along with the interest’s payable from the due date of completion till the amount is refunded.
- To continue with the project till completion, wherein he will be entitled to compensation along with interest payable from due date of completion of the project till the project is actually delivered.
Developers who default the delivery date will be required to pay an interest rate of 2% above State Bank of India’s lending rate to the home buyers. This is aside a possibility of imprisonment of up to three years.
#5 No false promotions. What you see is what you will get.
Previous many developers promoted their projects with false commitments and offers. However, under RERA each advertisement will have to carry the RERA registration number, and all the promotions or advertisements will have to be completely honest without any false commitments.
#6 Advance payment.
Property developer is prohibited from taking more than 10 per cent as advance from the allottees without entering into a written agreement for sale.
#7 Reduce the risk of builder insolvency/bankruptcy.
A developer usually runs various projects simultaneously previously builders were free to divert the funds raised from one project A to another project B easily.
Inappropriate delivery of real estate projects has been the major bane for the buyers. According to economic times, almost all projects launched between 2010 and 2013 had defaulted their delivery time mainly because funds were diverted to new projects by the builders. However under RERA, the developer will be required to move 70% of the money received from buyers to an escrow account. Post which, the money will be used as per the stage of the construction, that will be approved by engineers and chartered accountants of builders.
#8 Rate of interest on default for buyer/builder.
In case of default in payment by the buyer or default in delivery of the project on time by the builder ,the rate of interest to be paid shall be the same for both buyer /builder .
Earlier this was not happening if buidler delays the posession of property the interest paid by the builder to the home owners was less whereas in case of buyer default the payment the interest to be paid by the buyer was higher.
#9 Standardized carpet area.
Previously, builders used to charge for the built-up and super built-up area. This means if the buyer paid for 1,300 sq.ft., they would only be able to use the carpet area of around 900 to 1,000 sq.ft. This is the net usable floor area of an apartment that only integrated the internal walls. While, the rest of the area was covered by the external walls such as lobby, service shafts, balconies, open terrace, balconies, common spaces, etc. Under RERA, ‘carpet area’ has specifically been defined. Selling of property based on super built up area has been prohibited and can only be sold based on the carpet area. Furthermore, developers will also require consent of two-thirds of the buyers in a project before changing project’s plan or any other configuration.
#10 Builder will clearance before selling.
Earlier, builders often sold projects that did not have all clearances, causing many problems for the buyers. Under RERA, builders and agents will have to register themselves with the regulator, disclose every detail about the project and will be able to sell projects only after the necessary clearances have been attained.
To conclude: It is compulsory for all builders and agents to register with the RA (Regulatory Authority) after its establishment. They will also be need to list their projects along with all the information including, financial statements, copy of legal title deed and other documents. Post which, they will receive a project-wise registration number. Therefore, make sure you buy a project which is registered with the regulatory authority
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