For a novice the real estate dealings look like a puzzle. The promises the builders make at the beginning of a deal and what is delivered to the buyers at the end of the deal is always different. The buyers feel cheated by the deal as most of the amenities promised are not delivered to the satisfaction of the buyer. Many a times the houses are not completed and the delay in construction can extend over years. The investors can’t get back either their money or their property. In most of the cases this is the story so far. To rectify the legal loopholes in the existing policy and make real estate business more transparent and investor friendly, our Parliament has passed The Real Estate (Regulation and Development)Act 2016( RERA ACT) last year. The main intention of the RERA act is to bring transparency, and fair practices to protect the interests of the buyers and reign in the errant builders. The Union ministry of Housing and Urban Poverty Alleviation has formulated the requisite rules to be followed by the Regulator. The RERA Act 2016 came into existence from May 1st. 2017. As the real estate regulation is a state subject, all the states are required by the Act to have their Regulators and all the builders have to register their projects with the regulator. Most of the states are implementing the act with some modifications to suit their local conditions. Some of the states have added many changes to the Act. If implemented properly, the RERA Act can truly be a boon both to the home buyers and developers in the long run. Even though some disruption is expected at present, the real estate business is going to become more mature and consumer friendly and consequently, the demand for apartments and villas is going to increase in future.
Some of the key provisions of RERA are:
- Henceforth the promoters of real estate development firms have to create a separate escrow account for each of their projects. At least 70 percent of the money collected from buyers and investors needs to be deposited in this account. This money can be utilized for the construction of that project only.
- Developers need to inform the buyers about their ongoing other projects also.
- Under RERA the builders need to submit the original approved plans of their ongoing projects as well as any changes made to them after the approval.
- Developers need to furnish the details of revenue collected from the allottees, how these funds are utilized, and the probable date of completion and delivery of the project after duly getting the details certified by an engineer/architect/charted accountant.
- It is each state regulator’s duty and responsibility to register all the real estate projects and real estate agents operating in their state. Such details should be displayed on their official web site.
- The regulator will see to that the quality of the construction of the project is as per the per the promise made by the builder to the buyers. If any complaints are lodged with the authorities the builder has to rectify them within a month’s time.
- Without registering with the regulator the developers can’t advertise, sell, offer, market or book any plot, apartment, house, and building and seek investment in the project. After registration, they will be allotted a unique number for each project.
- Developers need to furnish all the details regarding their project’s financial details, legal title deeds and supporting documents at the time of registration.
- If the developer defaults and fails to furnish the project on time, they need to pay back the buyers all the money along with interest. If the buyer refuses to take the money back, the developers have to pay monthly interest for the duration of the delay till delivery of the flats.
- On the regulator’s website the developers are given a web page where they are allowed to upload information regarding their projects.
- To protect the buyers the RERA mandates that the builders/developers can ask not more than 10 percent of the cost as advance payment before signing the registered sale agreement.
- Regulator has the power to take action on the errant developer either to fine or imprison them, whatever is deemed fit for each case.
Leave a Reply