RERA-The Real Estate (Regulation and Development) Act, 2016 was passed by the Rajya Sabha on 10th of March, 2016
Finally the real estate act is a reality as it came into effect from May 1, 2017. The government aims to protect the rights of Home Buyers and bring in transparency in a largely unregulated sector. The Centre had asked all states to notify the Act before April 30, 2017 but only 13 States and UTs have so far notified rules. All real estate developers and agents are to register with their respective state regulatory authorities by July 30, 2017.
Following objectives are intended to be achieved with RERA:
- To protect the interest and ensure accountability towards the home buyers
- To bring in transparency, introduce fair practices and reduce frauds and delay in execution of real estate projects
- To organise the real estate industry by bringing in uniformity on a pan India basis
- To reduce information asymmetry between the buyers and developers
- To make both the developers and home buyers more responsible
- To make the builder-buyer contract enforceable through the regulatory framework
- To speed-up dispute resolution between the buyer and builder
Impact on the Real Estate Developers:
- More Transparency: The developer will have to mandatorily register all projects with the State Real Estate Regulatory Authority, along with detailed information about them– stage-wise time schedule for completion, sanctioned building plan, layout plan, land status, government approvals, inventory details-booked & unsold, names and addresses of their real estate agents, contractors, architects, structural engineers etc.
- Close Monitoring: 70% of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account(escrow) to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose. This will control fund diversion and lead to timely completion of projects.
- Full Accountability: Developers must list all projects and their details on the RERA website where the land area proposed to be developed exceeds 500 sq mt or the number of apartments proposed to be developed are more than eight inclusive of all phases. Without registering the project, no developer can advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building.
- Quicker Grievance Redressal: Any aggrieved person may file a complaint with the Authority, for any violation or RERA-The Real Estate (Regulation and Development) Act, 2016 passed by the Rajya Sabha on 10th of March, 2016contravention of the provisions of RERA or the Rules and Regulations made thereunder against any promoter allottee or real estate agent. If homebuyers are not satisfied with the decision of the regulator, they can approach the Appellate Tribunal for justice.
Rights of the Home Buyers:
- To obtain information related to sanctioned building plans, layout plans with the specifications approved by the competent authority
- To know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services
- To claim the possession of apartment, plot or building, and the association of allottees shall be entitled to claim the possession of the common areas
- To claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building
- To have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building
Duties of the Home Buyers:
- The Home Buyer shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registraRERA-The Real Estate (Regulation and Development) Act, 2016 passed by the Rajya Sabha on 10th of March, 2016tion charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, etc
- The Home Buyer shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid
- Every Home Buyer shall participate towards the formation of an association or society or cooperative society of the allottees
- The Home Buyers shall take physical possession of the apartment, plot or building within a period of two months of the occupancy certificate issued for the said apartment, plot or buildings
- The Home Buyers shall participate towards registration of the conveyance deed of the apartment, plot or building
Impact on Property Dealers(Real Estate Agents)
Property dealers will have to register with the RERA by paying a fee. At present , real estate agents are the most unorganised community mis-selling and mis-leading home buyers. Registration would ensure professionalism and more responsible behaviour of real estate agents as non-compliance with the provisions of RERA would attract punishment. The registration number granted by the authority shall be quoted by the real estate agent in every sale facilitated by him under the act.
With the Indian real estate market expected to touch US$ 180 billion by 2020 and the housing sector alone contributing 5% to India’s Gross Domestic Product (GDP), RERA was a much awaited act. We expect it to strengthen the real estate development both from the demand and supply side.