The RERA or the Real Estate Regulation and Development Act is considered to be one of the landmark legislations passed by the Indian Parliament. Its primary objective is to bring accountability to a country’s real estate. Alternatively, this Act also looks to address grievances of a country’s real estate sector and protects buyers’ rights, with the development community. RERA came into effect in May 2017 and has since been slowly coming into play across the country. The vast growing economy of India and the large numbers of people investing in real estate are two factors that gave rise to this act.
Listed below are the main features of the RERA Act:
- According this new legislation, the developer can’t make any changes to the plan without the written consent of the buyer. Consequently, this provision will not allow the developer to increase the cost of their project.
- The law ensures that the realty is completed on time of request. If delayed, the developer is required to pay interest on the amount paid by the buyer
- Registration is mandatory for all commercial and residential real estate projects where the land is over 500 square metres or includes eight apartments, all of which are under construction.
- As part of the new act, every phase of the apartment will be considered as a separate real estate project. Similarly, separate registration needs to be obtained for each new project.
- It is necessary for all projects to be registered with RERA, even those that are in the construction phase. Promoters are required to provide RERA with regular progress updates, and home buyers can follow these updates on the RERA portal.
- Failing to register a property will attract a penalty up to 10% of the project cost and a repeated violation could send the developer to jail for a term of three years.
- As per the new law, the developer will have to place 70% of the money collected from a buyer in a separate escrow account to meet the construction cost of the project. This will keep a check on developers who divert the buyer’s money to start a new project, instead of finishing the one for which money was collected. Additionally, it ensures that the respective project is completed on time.
- If the buyer finds any shortcomings in the project, then he can contact the developer within one year of taking possession.
- With the implementation of RERA—buying decisions have become faster, processes are more transparent and buying a home has become easier. Additionally, home loans will be more accessible as lenders will be more confident in approving projects.
- By appointing a regulatory body to oversee both Home buyers and Developers both will have more accountability and Real Estate as an industry will become more organized.
