RERA stands for Real Estate Regulatory Authority that is formed to bring in the transparency in the real estate sector. This RERA Act was first introduced by the Indian National Congress in 2013 to eradicate problems within the sector. This aims to reduce project delays and mis-spelling of luxurious properties and apartments. It is compulsory for all builders and developers to carry out RERA registration before they start the projects and ensure them with the state regulator. In 2015, the Union Cabinet of India approved 20 of its amendments and finally, it was passed by Rajya Sabha and Lok Sabha in the year 2016. It will protect the buyer’s interest in dealing or investing in real estate.
As per RERA, registration with the authority is mandatory for every project to be registered with the authority by disclosing relevant information concerning the property namely sanction plans, promoters’ details, and approvals, the total number of units mentioning their carpet area, etc. This provision will ensure that developers have all the approvals and are accountable for what they are committed to. Moreover, this will also ensure that they do not have any soft launches or advertise till the property is being registered with the particular authority. Additionally, the developer is required to update their corporate website respective to all necessary information including the actual ground progress of the project.
Monitoring the developers/builders:
Developers can’t advertise, invite, offer, sell, book or market any plot, house, 2/3 BHK apartment, building, or invest in any projects, without accomplishing the registration with the regulatory authority. Moreover, the number, type of apartments, projects, plots, their completion status needs to be updated on the website that can be checked by consumers or the regulatory anytime at their ease.
Safeguarding Consumer’s Interest:
It preserves and benefits the interest of all consumers by assuring the accountability of the capital/money flowing to the realty sector. Either of the builders or developers do not have the authority to change the plan or pricing of the projects without any prior consent from the consumers in a written document. Under this RERA act, a minimum of 70% amount of the buyer’s and investor’s capital/money will always be kept in a separate account. This money then later is allotted to the respective builders only for land and construction-related costs. Developers and builders cannot ask for more than 10% of the property’s cost as an advance payment before the sale agreement is signed.
No Delay in delivery:
Buyers often complain about the late delivery of flats and houses for sale due to various factors, however, RERA has brought up a solution to this problem. In case of the failure of the delivery within the specified time frame, the builder needs to return the amount invested by the buyer along with the agreeable interest rate as signed in the contract.
Builders are supposed to submit the original documents for all projects they undertake. Builders are not supposed to make any changes to the plans without the consent of the buyer.
RERA has now instructed developers to sell properties based on carpet area and not in the super built-up area. In the events where the project is delayed, buyers are entitled to get their entire money back that is invested or they can choose to be invested and receive monthly investment on their money.
The builder must rectify any issue faced by the buyer within 5 years of purchase. This issue must be rectified within 30 days of the complaint.
Benefits of RERA
Standardisation of Carpet area:
Before RERA the manner by which a builder calculated the price of a project wasn’t defined. However, with RERA there is now a standard formula that is used to calculate carpet area. This way, promoters cannot provide inflated carpet areas to increase prices.
The builder cannot take more than 10% of cost of the project from the buyer as advance or application fees. This saves the buyer from having to source funds fast and having to pay a large amount.
Reducing Risks of Insolvency of the Builder:
Most promoters and developers tend to have multiple projects being developed at the same time. Earlier, developers were allowed to move funds raised from one project to that of another. This is not possible with RERA since 70% of the funds raised need to be deposited in a separate bank account. These funds can be withdrawn only after certification by an engineer, a chartered accountant, and an architect.
Buyer’s Rights in Case of False Promises:
If there is a mismatch in terms of what was promised by the builder and what has been delivered, the buyer is entitled to a full refund of the amount that was paid in advance. At times, the builder may have to provide interest on the amount as well.
Defect in Title:
If at the time of possession, the buyer discovers that there is a defect in the title of the property, the buyer can claim compensation from the promoter. There is no limit to this amount.
Right to Information:
The buyer has the right to know all information about the project. This includes plans related to layout, execution, and completion status.
Rights to the Buyer in Case of any Defects:
Within 5 years of possession, if there are any structural defects or problems in quality, the builders have to rectify these damages within 30 days at no cost to the buyer.