Highlights of RERA [Real Estate (Regulatory and Development) Act, 2016]

What is RERA (Real Estate Regulatory Act) ?
The Real Estate (Regulatory and Development) Act, 2016 is an Act passed by Indian parliament to protect the interest of home buyers and also boost investment in real estate sector. Under this Act,central and state government notify their own rules under the Act on the basis of rules framed under the Central Act. This Act came into force on May 1,2016.

Why RERA ?
In the past, home buyers have complained that real estate transactions are loopsided and in favour of real estate developers. RERA aim to create a more equitable and fair transaction between the seller and the buyer of property. The RERA will give the real estate market its first regulator. The Real Estate Act makes it mandatory for each state and union territory, to form its own regulator and frame the rule that govern the functioning of regulator. 

How RERA will protect the home buyers ?
1. Enforcing timely delivery of projects 
In case of project delays, buyers have the right to -
a) Seek withdrawal of booking (the developer is liable to refund the entire amount along with interest).
b) Go ahead with project (with the condition that developer will pay interest for every month of delay until the property is ready for possession). The maximum time for refunding the buyer's investment is within 45 days of it becoming due.

2. Facility to check RERA registration number
All builders have to mandatorily register their projects under RERA with respective state regulatory authority and obtain a registration number for every project. Without RERA registration, developers are not allowed to sell their project. The project details, construction progress, commencement/occupation and other certificates, sales details, etc must be updated on single-point window i.e RERA portal, at regular intervals.

3. Financial safety via an escrow account
Home buyers investment can be considered safe, as RERA obliges developers to deposit at least 70% of the buyers money received for a particular project into an escrow account. This prevents the developer from rolling these funds into other projects. The rolling of funds was a major reason for project delays in the past.

4. Ability to verify the builder's track record
Buyers can now opt for properties from reputed developers who are complying with RERA norms and have a good track record and financial stability which can be verified by buyers.

5. Transparency in advertisement and marketing collaterals
Developers can now promote a project only after registering it with RERA. The unique RERA registration number has to be published with every advertisement/brochure or in any kind of project promotion at all.

6. Clarity on Carpet Area
The hitherto conventional practice of developers charging home buyers on the basis of the super built-up area no longer works. Under RERA, the quoted price has to be mandatorily based on the carpet area of the property.

7. Strict Norms on building changes
Around 2/3rd of the buyers consent in a particular project is necessary in case the developer intends to modify the building or layout plans/ specifications/ liabilities in the project.

8. Booking Amount cannot exceed 10%
Developers can only take 10% of the total property cost as a booking amount while the sale agreement is drafted at later stages. RERA prohibits developers to accept more than this. If guilty of charging more than 10%, the developer potentially invites penalty of imprisonment of upto 3 years.

9. Brokers must be registered under RERA, too
As service providers to real estate consumers, property brokers are also liable for all deliverables committed by the developers they represent. Hence, they must register themselves with their respective state Regulatory Authorities.

10. At long last, a reliable redressal mechanism
RERA provides a strong redressal mechanism to consumers by imposing a penalty on brokers/developers for any breach of obligation. Home buyers can file complaints against developers/brokers which will mandatorily be resolved in a span of 60 days from the date of the complaint.

11. Structural defects must be addressed
In case of issues within the building or apartment, such as inefficient plumbing, visible cracks, etc. In the initial five years after possession, developers are liable to rectify the defect in less than 30 days or else give compensation to the buyer.

12. Availability of land title documents
These vitally important documents were, more often than not, inaccessible to buyers before RERA. Now, they can scrutinize documents related to a project's land title ownership on the RERA website.

13. Goodbye to soft/ pre-launches
RERA has put a complete halt to soft launches, pre-launches and any other interpretations of selling something which doesn't exit as yet. 

Overall, RERA is a boon to the home buyers. While the progress of RERA implementation across states, barring a few, is going at a pace slower than predicted, it is definitely regaining the trust of home buyers by consolidating the sector and plucking out unscrupulous real estate players.

Source - The Hindustan Times               

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