Has RERA Worked?
What is RERA Act? RERA stands for Real Estate Regulations Act. As it is evident from its name, RERA is an Act meant to standardize or normalize certain regulations related to the real estate industry. The RERA Act was introduced by the Government of India in the year 2016 with the aim of protecting the interests of home buyers. The sole purpose of launching the Act was to put an end to the unfair and illegal practices followed by real estate builders in which homeowners were charged beyond just the property they were purchasing. As such, the Government has laid down certain specific rules and regulations that builders must follow while developing and selling real estate. The RERA Act mandates the establishment of a Real Estate Authority and an Appellate Tribunal in each state. In the event that the builder/developer commits any infraction, the property buyer can register a complaint with this body.
The idea was to provide the home buyer with total transparency in terms of development of the property he is investing in as well as financial transactions between builders and buyers. Builders are expected to follow all the rules and regulations laid down under RERA Act failing which buyers are given the right to lodge a formal complaint against them. The Act is to be followed in every state in India and is applicable on both, residential as well as commercial properties.
The introduction of the act has also led to the creation of a mechanism wherein issues such as project delays, quality of the projects, pricing of the property, etc. can be dealt with transparency. The RERA act aims to promote transparency, accountability, and efficiency in the real estate sector.
Some of the benefits that underline the fact that RERA has worked well within the Real Estate sector in India:
Grievances will be addressed and resolved as soon as possible:
If the buyer is dissatisfied with the construction or has a problem with the flat, the buyer has the right to file a complaint with the Appellate Tribunal under the RERA Act.
The Tribunal will hear your case within 60 days of receiving the Grievance case files. In addition, if the Tribunal is unable to resolve the issues, it must explain why.
Right to Property Information:
For home buyers, one of the most important benefits of the RERA act is the right to the property information. As a home buyer, you must have complete knowledge of the property you are purchasing. This type of information can be extremely beneficial to a house buyer when making future decisions.
The Developer or Builder has the right to share all facts about the project, including the Plan Layout. Construction stages, execution plan, completion status, and so forth.
Advance Payments:
Before engaging in a sales agreement, a Builder cannot take more than 10% of the cost of the Flat as an advance or application fee. This is one of RERA’s most significant advantages.
Before selling a project, builders will need all clearances:
In the past, builders might sell a project without all clearances. As a result, property buyers face a slew of issues.
However, under the RERA Act, this is not the case. All developers, builders, and real estate agents will be required to register with the regulator, disclosing every detail about their projects, and only then will they be able to sell them after the requisite clearance has been validated.
Fair Pricing and Refund Policy:
The regulation mandates developers to charge only on the basis of carpet area. This will ensure that buyers pay for only what they purchase which is expected to reduce the overall financial burden. In addition, RERA also specifies that if a buyer wishes to cancel the booking, the developer will have to refund the amount, along with interest, within 45 days. This provision safeguards the buyers from inordinate delays in the refunding process.
Project delays are prohibited:
Earlier home buyers had to face the inconvenience of not getting possession of the property at the time promised by builders. This is not permitted any more. It is mandatory for builders to complete projects within the time frame promised and builders who default on this are required to pay an interest rate of 2% above the lending rate offered by the country’s largest nationalized bank, the State Bank of India. Moreover, builders could also face a possible jail term of 3 years for project delays.
Builders cannot use your money for other projects:
Another major benefit of RERA is that developers must mandatorily deposit 70% of the sums received from buyers into a separate escrow account and the money can only be withdrawn in accordance with the construction stage as approved by builders’ chartered accountants and engineers.
Since the introduction of RERA most malpractices by builders have gone down rapidly. The introduction of the Act has proven to be a massive relief for buyers who are now getting exactly what they pay for. The RERA Act is doing just what it intended i.e., protecting the interest of buyers in several ways. RERA only applies to the development of real estate, not to the rental of real estate.
All residential and commercial projects, including shops, offices, and structures, are covered by RERA. To be sure, RERA is still a work in progress and, at best, still patchy in implementation. But what it has done is steered the sector, infamous for its lack of transparency, towards the right direction. It has pulled down the pace of fresh project launches and pushed developers to first build and sell what they have.
