Real Estate Regulatory Authority (RERA)
As name reads, RERA is an Authority which regulated Real Estate Norms, Real Estate Act is likely to benefit thousands of aggrieved home-buyers.
According to RERA, each state and Union territory will have its own regulator and set of rules to govern the functioning of the regulator. Centre has drafted the rules for Union territories including the national Capital. While many states are still behind on schedule for notification of RERA rules, many have notified rules and a regulator will start functioning. Some of these states are Haryana, Uttar Pradesh and Maharashtra.
Few ways which proves to be beneficiary to buyers by the RERA Act:
Under RERA, each state will have to setup regulatory bodies as appellate tribunals to solve the disputes between buyer and builder within 120 days.
Developer will have to put 70% of the money collected from a buyer in a separate account to meet the construction cost of the project.
RERA will make it mandatory for all commercial and residential real estate projects where the land is over 500 sq. mt. or eight apartments will have to register with the regulator before launching a project.
RERA also seeks to impose strict regulations on the promoter and ensure that construction is completed on time.
Carpet area has been clearly defined in the bill to include usable spaces like kitchen and toilets imparting clarity which was not the case earlier.
A developer’s liability to repair structural defects has been increased to 5 years from the earlier 2 years.
The buyer will pay only for the carpet area (area within walls). The builder can’t charge for the super built-up area, as is the practice at present.
Developers will be able to sell projects only after the necessary clearances. Under RERA, builders and agents will have to register themselves with the regulator and get all projects with more than eight apartments registered before launch.
To enable informed decisions by buyers, Real Estate Regulatory Authorities will ensure publication on their websites information relating to profile and track record of promoters, details of litigations, advertisement and prospectus issued about the project, details of apartments, plots and garages, registered agents and consultants, development plan, financial details of the promoters, status of approvals and projects etc.
How RERA will benefit builders
The builders will also benefit from the RERA, as it proposes to impose penalty on allottee for not paying dues on time. Also, the builder will have the opportunity to approach the regulator in case there is any issue with the buyer.
But, builders believe that the bill was heavily stacked against them. The bill provides for penalty up to 10 per cent of the total project cost or even imprisonment, if builders do not honour their commitment or fail to register themselves with the regulator.
The Real Estate (Regulation & Development) Act, 2016, the landmark realty law to protect home buyers from unscrupulous developers, will become operational from Monday, nine years after it was conceived.
The act was cleared by Parliament in March last year. Under the act, states had to notify the realty rules and set up Real Estate Regulatory Authority (RERA) by April 30. Without notifying the rules, the law will not become operational.
However, as on April 30, just 13 of the 32 states and Union territories, including Gujarat, Uttar Pradesh, Madhya Pradesh, Maharashtra, Odisha, Delhi, and Andhra Pradesh have notified the rules.
Only one state – Madhya Pradesh – has set up RERA while 9 others including Kerala, Maharashtra, Punjab, Rajasthan, Haryana, and Delhi have set up interim regulators.
Housing ministry officials maintain that remaining states have been directed to notify their rules at the earliest.
Here’s all you need to know about the new realty law:
• It makes it mandatory for all builders – developing a project where the land exceeds 500 square metre – to register with RERA before launching or even advertising their project. Developers have been given time until July 31 to register.
Not doing so will invite up to a maximum imprisonment of 3 years or fine of up to 10% of the total project cost.
Project Details need to be submitted and uploaded alongwith approved layout plan, timeline, cost, and the sale agreement, that prospective buyers will have to sign to the proposed regulator.
No Advertisement without disclosure clause this means that only those developers who fulfil the disclosure clause would be permitted to advertise their project to prospective buyers.
There will be Real Estate Appellate Tribunals to be set up in every state.
Right now, the real estate sector is largely unregulated in India. If a consumer had a complaint against a developer they had to make rounds of consumer or civil courts. Now, in case of any grievance, the consumer can go to the real estate regulator for redressal.
50% of the money collected from a buyer by Developers will have to put in a separate account to meet the construction cost of the project.
This means developers now cant divert buyer’s money on another ongoing project or to start a new project instead of finishing the one for which money was collected. It is usual practice to collect money from buyer and then postpone the work which won’t be possible now and the construction is completed on time henceforth.
The law of RERA Act is likely to stabilise housing prices. It will lead to enhanced activity in the sector, leading to more housing units supplied to the market.
Builders will also benefit as the law has penal provisions for allottees who do not pay dues on time. The builder can also approach the regulator in case there is any issue with the buyer.