RERA is an act for regulation and promotion of the real estate industry to make sure that the sale of apartments, buildings, or plots transparently takes place. The primary objective of the act is to protect the interests of the customers. It was approved by the parliament in May 2016 and it came into full force with its 92 sections by May 2017, all over India.
As of now, 14 states and union territories like Gujarat, Uttar Pradesh, Bihar, Madhya Pradesh, Odisha, Andhra Pradesh, and Maharashtra have notified their rules with RERA, and others are expected to follow. Best architects in India believe that RERA will bring relief to homebuyers as builders will be completely responsible for the timely delivery of the projects and to protect their customers from any fraudulent activities.
Top architects in Delhi assert that developers would also gain from RERA, as it might lead to an increase in confidence amongst their customers. The developers must get approvals from different government authorities before commencing any project and disclose all information on their website.
After that, real estate developers will be provided with a registration number by the regulator which they need to mention in each property sale. It will eliminate the possibility of misleading the customer. If that happens, then the authority has the power to impose penalties and imprisonment of agents.
Key Points Of RERA
- RERA will be followed all over the country and this regulation applies to both commercial and residential properties.
- The sale of the property will depend on the carpet area and not on the built-up area.
- The builders will be required to deposit 70% of the funds collected by the customers in a different bank account for the construction of the project.
- The developers need to disclose every single project detail from legal title deed to financial statements on the website and update it quarterly.
- Projects that have a plot size of a minimum of 500 sq. mt or 8 apartments, need to register themselves with RERA authority.
- The builders need to submit the original approved plans of the project and the alternative to RERA authorities.
- Both developers and buyers have to pay the same interest rate of 2% above SBI’s MCLR if there is any delay.
How will it impact homebuyers?
Some significant compliances are:
- One needs to inform allottees about any minor addition or alteration.
- The consent of 2/3rd allottees about any addition or alteration is of paramount importance.
- Can’t launch or advertise before registering yourself with RERA.
- One needs the consent of 2/3rd allottees for transferring majority rights to the 3rd party.
- Better quality of construction due to a defect liability period of five years.
- Need to form RWA within the specified time or 3 months after a majority of units have been sold.
One of the many positive aspects of this Act is that it provides a unified legal framework if you are planning to purchase flats, apartments, etc., and aims at standardizing the practice across the whole country. Builders must register the property they are working on under RERA. In case they do not, then we would advise that one must not move ahead and invest in it, as RERA is in place so that it can monitor the builders and make sure they are not abusing their powers.