The Real Estate (Regulation and Development) Act, 2016 was passed on the 10th March 2016. The primary objective of the said act is to protect the interest of both home buyers and real estate developers.
The act establishes the Real Estate Regulatory Authority or RERA, which aims to promote security, transparency and accountability in the real estate sector. Also, it also operates to sustain quality, fairness and authorisation in the practices of the same.
For instance, more than 79% of real estate projects across Maharashtra are registered under the RERA Maharashtra and over 64% of the grievances they received have been resolved.
Since the inception of the act, the body has been set up across several states in India. Some of the most active and popular committees of the same include Maharashtra, Delhi, Tamil Nadu and UP.
Significant Benefits of RERA
The following is the list of benefits that first-time homebuyers can experience with RERA in action –
- Standard Carpet Area Pricing: With the introduction of RERA, a uniform method is now followed by all builders to calculate the carpet area. Promoters who are registered will not be able to charge more than the standard price of a given carpet area.
- Default Rates of Interest: Previously, the rate of interest paid by homebuyers was more than what building agents had to pay in case of slightest delay in payment. With an active involvement of RERA, both parties are now subjected to a uniform rate of interest, which they have to pay to the other in case of default.
- Restrictions on Advance Payment: As per the regulations set by this body, builders cannot charge over 10% of the cost of the property as an advance fee. It serves to lower the financial burden on homebuyers who are short on cash at hand and intend to apply for an extensive home loan to finance housing project.
- Right to Be Informed: Homebuyers are now entitled to avail timely report on the progress of their housing project. Registered builders are liable to provide updates to homebuyers on matters relating to – plan layout, its execution and completion or delay of construction.
- Lower Chance of Insolvency: To eliminate risks of bankruptcy associated with real estate projects, RERA has imposed limitations on using funds raised from one project on another. It has also made it mandatory for agents to deposit 70% of the raised funds into a specific account and has imposed a limitation on its withdrawal limit. Make sure to know all about the RERA Act to learn about this feature and much more in details.
- Redressal of Grievances: This act permits individuals to avail speedy redressal for their grievances against promoters or building agent. They can do so by filing a complaint to the respective state authority. They can also appeal to the Appellate Tribunal in case they are dissatisfied with the body’s judgement.
Hence, it can be expected that RERA is going to alter the real estate market in the next few years. Nonetheless, home buyers should remember that they can avail all of these benefits and much more only if their property is under RERA registration.
Doing so, they will be able to eliminate the risks that are commonly associated with unregistered projects.
RERA has already made significant changes to the real estate sector of India with its strict rules and regulations. Consequently, individuals must follow all the norms formulated by the body while purchasing a house to avoid being subjected to any real estate malpractices.