The Real Estate Regulatory Authority (RERA) Act, 2016 is designed to protect the interest of home buyers and attract more investment in real estate. The bill was approved by the Rajya Sabha (Upper House) on March 10, 2016. The Act was introduced in 2013 by the Indian National Congress Government.
The RERA Act has been in effect since May 1, 2016.
The Act regulates the sales in the real estate sector, which include apartments, buildings, and plots, to make sure that the dealings are transparent and efficient. It also ensures the promotion of the real estate market in India. Section 2, sections 20 to 39, sections 41 to 58, sections 71 to 78, and sections 81 to 92 of the Act had come into effect from May 1, 2016. From May 1, 2017, the remaining Sections 3 to 19, section 40, sections 59 to 70, and sections 79 to 80 of the Act have been implemented. 14 of Indian states and union territories like Uttar Pradesh, Bihar, Gujarat, Madhya Pradesh, Andhra Pradesh, Odisha, and Maharashtra have already put RERA into effect, and more cities will soon follow.
The implementation of RERA has helped to protect homebuyers’ interests against any fraud builders and sellers. It also makes sure that the real estate projects are completed by builders on time and the transparency of business is maintained. As RERA ensures a well-regulated business environment, it also helps the builders. It creates a sense of trust between the buyers and the sellers.
The RERA governing authorities have set up websites for respective states where the developers need to disclose all the related information before starting a real estate project. They also need to get the project approved from different corresponding government agencies before initiation. Under RERA, real estate agents will be registered and provided with a unique number. This registration number has to be mentioned in every property sale. RERA also has the authority to enforce penalties and even imprisonment of the real estate agents if they do not follow the regulations.
The property buyers, sellers, and promoters/developers can avail of the various RERA benefits. Some of these include:
Previously, there was no fixed rule to determine the price of a real estate project and the builders used to inflate the carpet area to hike the price. RERA has provided a standardized formula that has to be followed to calculate the carpet area.
It is a common practice by the developers and promoters to handle multiple projects simultaneously. There was a time when they used to move funds between different projects. RERA has made it mandatory for them to have separate bank accounts for different projects and deposit 70% of the fund in the account. To withdraw the money, they need certification from an architect, engineer, and a chartered accountant.
Before the RERA Act, 2016 builders were allowed to ask the buyer for any amount of advance payment. Now, the buyers have to pay only 10% of the total cost as advance payment. This way, the consumers do not have to pay a large amount at once.
If the consumer complains about any defects in the property’s structure or any quality issue within five years of possession then according to the RERA regulations, the builder needs to correct the issue free of charge within 30 days.
If the promoters delay in handing over the property to the buyer, they have to pay a penalty interest to the buyer. In case the buyers delay payments, they have to pay the penalty to the promoter too. Before RERA, the penalty payable by the buyer was higher. Now, they need to pay the same amount.
If the buyer does not receive what was promised to him or her, the builder has to return advance payment. The builder might have to pay an interest on the advance payment in certain cases. So those who have opted for Home Loan are safe in this case when it comes to EMIs and interest rate.
If the buyer notices that there is any defect in the title in the time of property procession, the RERA Act allows him or her to claim for compensation from the promoter.
RERA allows the buyer to ask for any information related to the real estate project. It might be regarding the project plan, implementation, and completion.
If any buyer, agent, or the promoter has any grievance about the project, they can address their concerns to RERA.
As per the RERA rules, to be eligible for applying, these following documents and information have to be presented by the builder:
Balance sheet and last three years’ income tax returns
Details about the carpet area, parking area, and number of floors of the apartment
Documents to prove the legal right on the land
Information about the land, which includes title, rights, and mortgage
Consent letter of the landowner in case the builder does not own it
Details about the project, which include layout, sanctioned plan, and location
Information of the engineer, architect, and any other involved professionals
The RERA Act, 2016 has the following implications:
The Real Estate Regulatory Authority has to be established in every state to regulate the real estate projects of that state
The Act applies similarly to both commercial and residential properties
The Act establishes standardized regulations to equally protect the interest of the consumer and the builder
The Act demands the real estate sector to be more accountable to its actions and be more transparent
The Act is designed to reduce project delays and abolish misleading advertisement
RERA is a very important step towards maintaining transparency in the real estate sector. It not only promotes an environment where the homebuyers can invest money in the property without worries, but RERA makes sure that the interest of the builders and the promoters are also sustained.
Home loans available at Finserv MARKETS have flexible repayment tenures and competitive interest rates. You can avail a loan of up to Rs. 3.5 crores for a term of 25 years. Additionally, you can also customize your loan according to your requirements. Lastly, it is advisable to calculate your monthly instalment of home loan beforehand, this will help you repay your loan amount within the specified tenure.
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