RERA came into effect from the 1st of May, 2017. The reason that the Real Estate Act is trending for a long time now is because it promises to make customers the true kings when it comes to buying property. The Real Estate Act has been designed to ensure greater transparency and accountability in the realty sector and according to Venkaiah Naidu, the Union Minister for Urban Development, Housing & Urban Poverty Alleviation, this will make home buyers the real kings.
All the states and Union Territories are required to notify the rules and the Real Estate (Regulation and Development) Bill or RERA was passed in March 2016 and this encourages genuine private players in the realty sectors while protecting the interests of home buyers. Naidu has already stated that the Act clearly defines the rights and duties of developers/promoters and also lays down buyer rights clearly. Under RERA, there is the provision of mandatory property registration and 70% of the project money has to be kept by developers in an escrow account which will reduce buyer risks to a large extent. This will also ensure that developers will be unable to invest money across multiple new projects with booking money from one project, thereby delaying project completion and handover to their customers.
The promoter is liable to provide a clear title while there are clearly defined penalty clauses for developers under the Act. Real estate agents and brokers have also been covered under the purview of the Act.
In a nutshell, here are some of the key benefits that you can expect:
- Developers have to keep 70% of the collected amount from customers in an escrow account to ensure that money is not diverted to another project
- There will be fines and penalties in case of developers not meeting delivery guidelines and commitments
- Appellate tribunals and regulatory bodies have to be established in every state to solve buyer-builder disputes within a period of 120 days
- Developers cannot change the design of a project without the consent of buyers
- Carpet area will have a uniform definition and buyers will pay just for the carpet area. Builders cannot charge for super built-up areas
- Developers can only sell projects once they have got clearances and have registered themselves with the regulator. Agents will also have to get registered. All projects having more than 8 apartments will have to be registered prior to launch. All project details will have to be disclosed
- The developer will have to provide 5 year warranties for any structural defect in the building
RERA is expected to shake up the real estate industry and bring in greater accountability while ensuring an environment where only genuine and authentic developers and companies thrive on the basis of the trust and respect that they get from customers with proper checks and balances at every step. RERA makes home buying safer but its final and effective implementation depends on the states.