RERA sets the groundwork to clean the real estate practices in India
As we usher in a new day and age for India, the last decade provided the seeds of growth for India on a path to becoming a superpower. Our brightest minds are pioneering and treading new ways across industries. Be it steering multi-million dollar organisations as the CEO or CFO to building bright new start-ups, there's much to be proud about, for the unique amalgamation of communities, that is India.
Like the strides in several industries, the real estate space has woken up to a new age of compliance and accountability with the establishment of RERA (The Real Estate (Regulation & Development) Act, 2016) which came into effect on 1st May, 2017, to help standardise several practices in the real estate world and thereby also provide you, the buyer with some credible backing to stand against any errant realtors.
Not so long ago were the days when builders and realtors made false promises and lent a deaf year to the complaints of their buyers. With the establishment of RERA and its Regulatory Authorities (RAs) across states in India, realtors now need to follow through in strict adherence to the policies of the act, which have been compiled keeping the buyer in mind.
While the pre-RERA days of buying a new home might still haunt many of you, like challenges of getting possession of your homes in time to navigating through layers of misinformation or to get your requests heard. With RERA, you can certainly breathe an air of relief.
Let's look at some of the aspects of this Act and how they benefit you, the buyer:
Information and Transparency â€“ Often times, you would have heard your friends and relatives harrow on about having been promised something and then dumped when they got the delivery of their homes; stories of realtors promising wonderlands, who failed to satisfy even the mediocre basics. RERA has taken charge to ensure that realtors keep to their word. This means no false advertising, no hidden costs and unexpected changes in timelines or project plans. It means clarity on development layouts, schedules and timely updates to keep you abreast with the building of your home.
Allocation, Misappropriation of Funds and Charges: While construction and development of residential and commercial projects is a mammoth task, a good builder is expected to be conscious in their allocation of resources and funds to ensure they meet the expectations of their buyers. Although, all too often we have heard of builders allocating funds from one project to another which in fact is incorrect as it causes delays or resource shortages on the projects for which the funds were allocated in the first place. Under RERA, Authorities have come up with a simple way to tackle these cases of misappropriation that have affected so many projects and home owners, some who have had to wait more than 7years to get the keys to their homes, due to construction delays on their projects. From now on, all builders and promoters have to deposit funds into escrow accounts and can only utilize those funds for the project they are intended for. RERA having registered information of the builders and their projects will maintain stringent checks to ensure these rules are followed. What's more, realtors can no longer levy exorbitant booking charges from potential buyers. RERA has restricted the same to a maximum of 10% on the property cost unless and until a registered sale agreement between both parties is signed.
Quality and Promise: Any real estate project since the establishment of the act and also on-going projects started prior to the act coming into effect, have to be registered under RERA and builders have to submit all plans, resource estimations and other particulars before commencing on the project. RERA then reserves the rights to scrutinize any changes proposed by certified architects, planner and chartered accountants to ensure there is no foul play. If found, Regulatory Authorities, can impose significant penalties on the builders and promoters and in some cases even compensatory payments to the buyers for inconveniences. Furthermore when a project is completed, RERA will conduct an inspection to make sure the builder has abided by the proposed plan and promised level of quality. As a buyer, you also have a 5 year window to raise any quality complaints on the development to RERA authorities who will then conduct an investigation to determine the appropriate actions.
A Governing Authority: Being one of the first acts registered in the real-estate space, RERA aims at providing a veil of protection for real estate buyers. The authority requires all realtors, builders, agents and consultants operating in the real estate space to register themselves with their respective state regulatory body and thereby agree to abide by the prescribed rules and regulations of the act. This establishes authenticity of promoters, real-estate owners and agents.
RERA dawns an age of accountability for Real Estate businesses and safeguards the rights of buyers, thereby levelling the playing field. We look forward to more developments in the space of real estate policies and will be sure to keep sharing new updates with you, our readers.
If you would like to dive deeper into the clauses and provision of the act along with its benefits, we recommend checking the following article: