RERA or the Real Estate Regulations Act seeks to protect homebuyers and redress grievances as well as help boost investments in real estate industry
Words: TILLANA DESAI
Early last year, the RERA act was passed by the parliament and the Union Ministry of Housing and Urban Poverty Alleviation to formulate and notify rules for the functioning of a regulator. With an aim to bring about clarity, transparency and fair practices in the real estate industry, RERA will protect the interests of buyers and penalise errant builders.
KEY PROVISIONS OF RERA
The promoter of a real estate development firm must maintain a separate escrow account for every project. A minimum 70 per cent of the money from investors and buyers will have to be deposited. This money can only be used for the construction of the project and the cost borne towards the land.
Buyers must be kept informed about developments of projects for their clarity
Builders will have to submit original approved plans for their ongoing projects and any alterations that they make. They also must furnish details of revenue collected, where and how the funds were utilised, the entire timeline of the construction, completion and also the delivery certified by an Engineer/Architect/practicing Chartered Accountant.
State regulators will register real estate projects and agents operating under RERA. These details will be open for public to access on web.
Any reported issues in services will have to be rectified by the developer in 30 days.
Developers can’t invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority. Post registration, all the advertisement inviting investment will have to bear the unique RERA registration number which will be provided project-wise.
After registration, developers will furnish details of their financial statements, legal title deed and supporting documents.
If the promoter defaults on delivering the project within agreed deadlines, they will be required to return the entire money invested by the buyers along with the pre-agreed interest rate mentioned in the contract based on the model contract given by RERA.
If the buyer chooses not to take the money back, the builder will have to pay monthly interest on each delay month to the buyer till they get delivery.
Developers cannot ask more than 10 per cent of the property’s cost as an advanced payment for booking before signing a registered sale agreement.
Any errant builders with complaints registered against them can be imprisoned for a project for up to 3 years.
The Editorial Team of Urban Vaastu asked a few industry experts their views on RERA.
Rahul Saha Sr. Town Planner and Architect Urban Development and Urban Housing Department Government of Gujarat
“The much talked about RERA Act has been long awaited.
I hope it will bring the much-awaited transparency and no discrimination in the Real Estate Market.
It should definitely be beneficial and bring encouragement among the genuine buyers and the end users who till now have always remained helpless and in doubt due to the volatile nature of the property market.
The Regulatory Authority will be set up at Central and State Levels, however it will be interesting to see how various sections of the Act are actually implemented as many sections do not favor existing Property Players.
There can be nothing better if the ‘Consumer First’ approach can be achieved in true sense.
The best part is that buyers will pay only for the carpet area.
Builders will also have to maintain higher construction quality and keep better checks.”
RE/MAX is a member of the NAR (National Association of Realtors) and is one of the largest real estate consultant groups globally.
RERA is a great move in the right direction for end users, however, its implementation is the key. While Land laws come under the central government, RERA is state governed. A lot of confusion is thus caused. Unless it too is directed under Central laws, RERA will get diluted.
For example, the law was set to be implemented by the 1st of May 2017, but wasn’t and ongoing projects executed nevertheless. Thus, buyer’s interests may not be safeguarded. The state government must take strict and drastic steps to protect the interests of end users – which is actually the whole idea behind RERA. The act which should ideally have been implemented on day one itself irrespective of the status of the property.
RERA has the potential to bring in a great revolution and stop all the wrongly inflated prices of the property if enforced correctly. Why are properties more of an investment these days? It is simply because of this false inflation. With RERA, end users will be able to purchase properties for their use and not just as an investment.
In China for example, whole ghost cities were created due to false inflation. To avoid this happening in India, RERA is the key.
Keyur Patel, CEO, Valencia Group
With RERA, there will be a mandatory disclosure of project details, including those of the promoter, project, land status and clearances. This will increase the credibility of developers and protect consumer rights as well. So it is positive for industry transparency. These initiatives will contribute to organizing this sector that has been traditionally fragmented and unorganized while improving consumer confidence. The guidelines given in RERA are of prime importance for everyone related to real estate business as they will ensure complete transparency and discipline in the sale or purchase of a property. So on time possession, pay for what you get, construction warranty and many more trust factor for both ends is what one gets.