February 18, 2018
The real estate sector in India has been historically viewed through a cloud of mistrust owing to the various issues that homebuyers have had to face. Recurring instances of projects being delayed and ambiguous information regarding real estate projects have led to scepticism among the buyers about real estate investments.
RERA has been welcomed warmly by the consumers as it has brought about new levels of transparency into real estate, and reinstated faith of the consumers in real estate.
The introduction and implementation of the RERA (Real Estate Regulatory Authority) Act, enacted by the Parliament of India, has now put property transactions under the purview of a regulator. This means that you can invest in a home knowing that: -
There is a provision in place to protect homebuyers, and
There are strict regulations governing real estate transactions
While the act came into effect on 1st May 2017, there is still lack of clarity among the home-buyers about the ambit and implications of the act for them; speaking of which: -
RERA, or the Real Estate Regulation Authority, is a government organization that controls and regulates the real estate sector and its activities. The primary aim of the RERA Act is to bring transparency to the real estate sector, thus making it a pro-consumer act. Simply speaking, RERA offers a single platform where any buyer or investor can easily check out all the credentials of a real estate project or developer, which helps reduce any doubts which one may have related to purchasing a property.
Therefore, from now on:
All the promoters, agents and builders need to be registered with RERA, which brings in a lot of clarity to the sector. Plus, every state will have a dedicated Appellate Tribunal to adjudge any real estate disputes which come under the scope of RERA.
RERA covers residential as well as commercial projects. All projects where the land is more than 500 sq. meters or if it includes 8 apartments and more, must be registered with RERA.
End Objective: This will help prospective homebuyers to avoid investing in illegal construction. All that is required to be done is to cross-check the RERA registration of the project.
RERA is applicable only to development of real estate property, and not renting of a property.
This is an illegal practice where builders have been known to increase costs without consent from buyers. As a result, by the time homeowners had to make final payments, they would notice that the costs have been increased significantly. This is not something homebuyers sign up for; yet were burdened with by the developers subsequently.
End Objective: With RERA, there is an approval system between the buyer and builder/developer. Hence, any change that is to be done can only be done according to the written agreement.
A developer cannot take more than 10% as advance payment before entering into an agreement of sale.
Many a time, projects do not get completed by the time that was stated in the schedule, and due to that, homebuyers are left with long periods of wait. However, in the current scenario, if the completion of a project is delayed, the builder will have to pay the buyers the same interest as is applicable on the EMI that the buyers are paying for the investment.
End Objective: This way, more and more builders are adhering to completing their projects within the committed time-frame, making it one of the top benefits of the RERA Act for homebuyers.
If you want to withdraw from a project due to delay in completion, you are entitled to -full refund + payable interest from committed date of completion to actual date of refund.
RERA makes it mandatory for builders to provide all the information about the project plan like completion schedule, the status of the land title and status of approval by the government. This in turn removes the ambiguity that was earlier faced by homebuyers and investors.
End Objective: By doing this, RERA ensures that home buyers have complete and authentic information about all the new, upcoming, and current projects.
If an apartment develops a defect, either structural or qualitative, within 5 years of possession, the builder will have to rectify it within 30 days at no extra cost.
Many builders in the past have charged homebuyers for the super built-up area, which also includes their share of the common areas, instead of the carpet area alone. This practice has been made illegal under the new law.
The carpet area can be referred to as the net usable area of the apartment. While it includes the internal walls, it excludes areas covered by terraces or balconies, or service shafts.
The super built-up area, on the other hand, is the built-up area (carpet area + area covered by the outer walls of an apartment) plus the proportionate share of the corridors, entrance lobby, lift shafts, generator rooms, inaccessible flower beds, water tanks, and other areas that are basically ‘shared’ among residents.
End Objective: This eliminates the practice involving the sale of properties based on unclear promotions; the buyer only pays for the carpet area.
Appellate Tribunals are to adjudicate cases related to real estate disputes, which come under the scope of RERA, within 60 days.
GOOD TO KNOW
Grievances related to repair or renovation for the maintenance of a township/apartment complex will not be investigated under RERA.
Overall, the RERA Act can be considered as a historic reform in the Indian real estate sector. It has brought in a lot of transparency to the home-buying process and empowered homebuyers to invest in property with renewed confidence.