The much talked-about act, RERA, related to the real estate sector was finally enacted by the Government of India on 26th March 2016 and brought into effect from 1st May 2017. However, many questions arise as to what is RERA, how will it affect the common man and what will be the impact of RERA on real estate as home buyers.
To get answers to all these questions, let’s dig deeper into this topic.
RERA, A Need Of The Hour
For a prolonged period, primary home buyers were in a dilemma when it came to buying their dream home as the transactions in the real estate sector favored the developers, not the buyers. Many people lacking any substantial knowledge and the necessity of any significant investment continued entering into the real estate sector, as they considered it as the easiest and the most profitable business venture.
To put an end to all the malpractices happening in this sector, the Indian Government introduced the ‘Real Estate Regulation and Development Act’ or RERA.
The RERA model aims to create unbiased transactions between the home buyer and the agent, by bringing better accountability and transparency in the real estate sector.
Functioning Of RERA
The primary motive of RERA is to protect the home buyers from malicious practices and spur investments in the real estate sector.
Under the Act, only registered agents are eligible to carry out property dealings. Every real estate agent needs to make an application to Real Estate Regulatory Authority, established under subsection (1) of section 20 of Real Estate (Regulation and Development) Act, 2016, for getting registered accompanied by the prescribed fee and documents. The authority has the right to grant registration or reject the applications.
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Every real estate project must also be registered with its respective state’s RERA. Promoters are asked to provide detailed information such as land status, approvals, details of the developer, and schedule of completion. Only when registration is completed, and all the other requirements are met, the project is allowed to be marketed.
To avoid interruption in projects, caused due to delay in the diversion of funds, promoters have to pay 70% of all the project receivables in a separate reserve account, the amount of which can only be used for land and construction expenses.
Impact Of RERA On Home Buyers
Owing to this act, home buyers can now monitor the progress of a project on the RERA website as promoters are required to input updates of the development of the project.
In addition, they are required to obtain insurance against the project title and construction. The proceeds of the insurance shall go to the allottee upon execution of the agreement of sale. Owing to RERA, home buyers are kept away from the previously inserted punitive clauses by the promoters against the home buyers.
Impact Of RERA On The Real Estate Industry
With the introduction of RERA, forums such as the State Real Estate Regulatory Authority and the Real Estate Appellate Tribunal will be established. The aggrieved party can directly approach these forums to resolve disputes related to home buying than other consumer forums and civil courts. The industry has also succeeded in gaining back the confidence of home buyers. It has also attracted higher investments.
To ensure that the Act is not taken lightly, stiff monetary penalty (up to 10% of the project cost) and imprisonment has been recommended against violators.
So, with all the positivity around RERA, can we say “achhe din aa gaye” (translating to “the good days are here”) at least in the real estate sector!
