After a long-standing demand for a system that would help foster transparency in the property market plagued with project delays and other issues, the Real Estate (Regulation and Development) Act, 2016 (RERA) was finally shown the light of the day on May 1, 2017. In fact, it was a year earlier that the Act was passed before the Parliament. The Union Ministry of Housing and Urban Property Alleviation, however, had provided a time of 1 year until May 1, 2017, to states and union territorires for formulating and notifying rules to ensure the smooth functioning of the regulator. But how will it function and benefit homebuyers is an interesting watch. So, stay glued and note down every single development related to RERA carefully for a smooth foot forward towards your dream home.
How Will RERA Act as a Rearguard Action to Soothe the Pain of Homebuyers?
RERA has come out to eliminate the issues of project delays, price, poor construction, title, among others. The Act mandates each state and union territory to put in place its own regulator and the rules to govern the functioning of the same. As per RERA, builders would have to submit the original approved plans pertaining to their ongoing projects and alterations if they make later on. Also, they are supposed to provide details regarding the revenue they have collected from the allottees, the utilization of funds, the timeline for construction & completion, along with the delivery that would need a certification from an engineer, architect or a practicing chartered accountant.
The regulator of each state would have to get the real estate projects and real estate agents in their territory registered under RERA. What makes things more transparent here is the fact that the details pertaining to all the projects would be available on the website for the homebuyers and others to access.
Those developers, who were earlier making a splash by advertising, selling, marketing or booking an apartment, building a house and making fresh investments, would now have to register the property first with the regulatory authority before doing so. Subsequent to registration, the advertisement to invite in real estate projects would bear a unique RERA registration number, with each project given a separate number. Also, the developers would be required to submit details like their financial statements, legal title deed as well as supporting documents. This, hopefully, should eradicate the possibility of any fraudulent sale of projects by the developers.
Giving relief to the homebuyers, RERA stipulates that the advance booking amount, which the developers charge from the buyers before signing a registered sale agreement, must not exceed 10% of the property cost. But what many homebuyers were yawning in past and even now is the return of money due to project delays, which in many ways, can be ensured by RERA as it mandates the real estate promoter to do so if they fail to provide the delivery within the deadline as agreed. Not only the money invested by the buyers, even the pre-agreed interest rate mentioned in the contract have to be returned by the developers. For buyers not willing to take back their money, developers would have to pay interest to the buyer on each month delay until the delivery.
Also, the mandate given to developers for rectifying the quality of construction within 30 days is a shot in the arm of homebuyers whose demand for the same seemed to have gone to the deaf ears before the institution of the regulator.