How Does RERA – The Real Estate Act Benefits Buyers?...Read More
The Real Estate Regulatory Authority or RERA was established 1st of May 2017. It is an act passed by the government to create a mechanism that effectively regulates and directs issues like property pricing, project delivery delays, quality of construction, title, and other changes more efficiently and transparently. It is mainly aimed at protecting the interests of buyers in the real estate sector. The RERA act makes it mandatory for all commercial and residential real estate projects with a land coverage of over 500 sq.m. or 8 or more apartments to register with the Real Estate Regulatory Authority. Additionally, real estate consultants who mediate real estate sales will also have to register with RERA. They will be issued a unique registration number for every State or Union Territory and will be required to show this number during each sale.
Here are a few benefits in which buyers are likely to be benefitted from the RERA Act:
Builders will not be able to delay the projects:
Under RERA, not receiving possession of apartments from the builder will not be a problem anymore. Developers who delay the delivery date will be required to pay an interest rate of 2% above the State Bank of India’s lending rate to the home buyers. Also, there is a possibility of imprisonment of up to three years.
Builders will be held responsible for any fault in the project construction:
For many buyers the quality of the construction has been a concern. Under RERA, any structural defect that occurs to the property for up to 5 years from the date of handing over possession will have to be fixed by the developer. It shall be the responsibility of the promoter to rectify such defects within 30 days without additional cost.
Builders will not be able to charge for the excess area:
Earlier, Buyers were charged for the built-up and super built-up area. This means they paid for 1,300 sq.ft., but would be able to use the carpet area of about 900 to 1,000 sq. ft. only. This is the net usable floor area of an apartment that only included the internal walls. While, the rest of the area was covered by the external walls such as the lobby, open terrace, balconies, service shafts, common spaces, balconies, etc. Under RERA, the usable carpet area has specifically been defined. The selling of property can only be based on the carpet area. Additionally, developers will also require the consent of 2/3 of the buyers in a project before changing the project’s design or any other structure.
Builders will not be able to use your money for some other project:
Delivery of real estate projects has always been the bane for the buyers. However, under RERA, the developer is required to transfer 70% of the payment received from buyers to an escrow account. Post which, the funds will be withdrawn as per the stages of the construction, which will be approved by chartered accountants and engineers of builders.
Grievances will be addressed and solved quickly:
Under RERA, regulatory bodies and appellate courts are set up in each state to solve builder-buyer disputes. Any person aggrieved by any direction can expect a resolution from the appellate in 120 days.
Builders will require all clearances before selling:
Earlier, builders often sold projects that did not have all clearances, creating many problems for the buyers. Under RERA, builders and consultants will have to register themselves with the regulator, disclose every detail about the project and will be able to sell projects only after the necessary clearances have been obtained.
No more fake promotions:
Under RERA any advertisement or promotional design will have to contain the RERA registration number, and all the promotions or advertisements will have to be completely transparent without any false commitments.
To conclude, all builders and consultants must register with the Regulatory Authority after its establishment. They must also register their projects along with all the information including, financial statements, copy of legal title deed, and other documents after which, they will receive a project-wise registration number.
Hence, make sure you buy a project that is registered with the regulatory authority!