RERA ACT (Regulation & Development Act) was introduced in 2016 and made homebuyers easy property navigation with transparency and better accountability within the real estate sector. RERA guidelines help investors by bridging the gap between developers and homebuyers and encouraging a more impartial and trustworthy environment for all.
RERA Act Initiative
The real estate sector plays a crucial role in the economy and acts as a bridge in meeting a country’s housing and infrastructure needs and demands. Undoubtedly, this sector has grown in the past few years; however, due to a lack of standardisation and adequate buyer protection, this sector became a bit risky for investors. This was the time when RERA was introduced into the economy in 2019, offering both the buyer and seller a sense of security and transparency.
Let’s understand the RERA Act and rules that fall under this initiative and what their roles and responsibilities are:
About Real Estate Act, 2016
This act states that under Section 84 of the Real Estate Act 2016, all the state governments need to enforce regulations within 6 months of the start date of the act’s implementation in the provinces of the act.
General Direction for RERA Act
General directions are taken care of by the central government via the Housing and Urban Poverty Alleviation Ministry. This act also addresses issues related to financing, like home loans for potential investors.
Chandigarh, Lakshadweep, Daman & Diu, Dadra & Nagar Haveli, and Andaman & Nicobar Islands, the union territories, are also included under this regulatory framework act.
RERA’s Guidelines:
- Registration: All real estate projects, except for certain categories, should be registered with the respective state RERA authorities.
- Project Information: Developers are obligated to upload detailed project information, including floor plans, approvals, and construction updates, on the RERA website.
- Escrow Accounts: A significant portion of project funds must be deposited in an escrow account to ensure timely completion and prevent misuse of funds.
- On-time Delivery: Developers are required to adhere to project timelines and deliver possession within the stipulated timeframe.
- Grievance Redressal: RERA establishes a robust mechanism for addressing complaints from homebuyers and investors.
How does RERA protect homebuyers?
One of the most growing industries is real estate, because of which a number of developers are available in the market to offer the dream home. Hence, attracting investors without any undivided attention has become a bit tricky and needs a lot of attention.
Here are some ways RERA protects homebuyers:
Builders no longer delay the projects. This means if a person invests in any property and has dates with them and does not get the property on time, then the builder is liable to pay a 2% tax to the State Bank of India, and in some cases, imprisonment is also there for up to 3 years.
Prior builders used to charge for built-up and super-built-up areas; this means that if an investor paid for 1300 sq. ft. of land, they would only be using a maximum of 1000 sq. ft. of carpet area. This was the net usable floor area for the apartment, including the walls.
As per RERA, if any constructed structure defects within 5 years from the date of handling to the investors, the developer is liable to repair that property. This is the duty of the promoter to check and rectify any defects within 30 days without charging.
One of the biggest issues with real estate projects was the untimely delivery of projects. With the RERA Act, the developer needs to transfer 70% of an escrow account that they received from the investors. Later on, that amount is further subdivided among engineers and chartered accountants of builders after approval.
Before introducing the RERA Act, few builders used to sell the property without having proper clearances, which used to cause trouble to the buyers. Under RERA guidelines, if any investor faces such an issue, then the issue will be resolved within 120 days.
What are the benefits of RERA?
Benefits of RERA:
- Reduced Risks: RERA mitigates risks for homebuyers by enhancing transparency and accountability within the real estate sector.
- Increased Confidence: It instills confidence in homebuyers by providing a legal framework that safeguards their interests.
- Improved Quality: RERA encourages developers to maintain higher standards of quality and adhere to project timelines.
- Streamlined processes: It streamlines processes for both developers and homeowners, reducing delays and administrative hurdles.
What are the different impacts of RERA on real estate?
RERA (Real Estate Regulation and Development Act, 2016) has had a significant impact on the Indian real estate sector. Here are some key areas:
- Increase in Transparency
- Developers/builders are now required to disclose crucial project details like plans, approvals, land status, and timelines on the RERA website.
- Transparency in work empowers homeowners to make informed decisions and minimizes the risk of unforeseen delays or project cancellations.
- Accountability Enhanced
- RERA guidelines hold developers accountable for taking responsibility for project timelines and delivering promised amenities.
- This also offers a giant grievance and provides a robust revised method for homebuyers to address concerns and seek resolutions.
- Reduced Litigation:
- By implementing transparency and accountability, the RERA Act aims to minimize disputes and legal battles between developers and homebuyers.
- Consumer Protection:
- RERA always prioritizes the interests of homebuyers by establishing a regulatory framework that safeguards homebuyers’ investments and rights.
- Boosting Investor Confidence:
- RERA brings confidence among investors by creating a more predictable and transparent market. It enhances the credibility of the real estate sector.
- Impact on Developers:
- RERA has increased the operational costs and compliance burdens for developers, which has led to a shift towards more organized and professional practice within the industry.
Overall, The RERA Act has brought about a significant positive shift in the Indian real estate sector by enhancing transparency, accountability, and consumer protection.
While there have been challenges in implementation, it has laid the foundation for a more organized and trustworthy real estate market.
