Real Estate Regulatory Act (RERA)-Important Guidelines
The Indian real estate industry, particularly the residential sector, was in the past rightly characterised as being unregulated and unorganised with unreasonable project delays and poor quality of construction being definitive aspects.
The arrival of the Real Estate Regulatory Act (RERA) in March 2016 brought in a paradigm shift in the sector and metamorphosed it into a more mature, systematic and regulated one.
RERA came into force on May 1, 2017, and is meant to be a buyer-friendly regime targeted to address their grievances and promote transparency, efficiency, financial discipline and accountability in the sector.
Indeed, buying a home is not only the most cherished dream for many Indians but also one of the biggest long-term financial commitment in the buyers’ lifetime.
Considering this, there are 14 important guidelines incorporated in the RERA umbrella:
1. Timely delivery
In case of project delays,buyers have the right to — (i) Seek withdrawal of booking (the developer is liable to refund the entire amount along with interest) and (ii) Go ahead with the project (with the condition that developer will pay interest for every month of delay until the property is ready for possession). The maximum time for refunding the buyer’s investment is within 45 days of it becoming due.
2. Checking reg. number
All builders have to mandatorily register their projects under RERA with the respective state regulatory authority and obtain a registration number for every project. Without this, developers are not allowed to sell the project. The project details, construction progress, commencement/occupation and other certificates, sales details, etc. must be updated on the single-point information window i.e. RERA portal, at regular intervals.
3. Escrow account
Investments can be considered safe, as RERA obliges developers to deposit at least 70% of the buyers’ money received for a particular project into an escrow account. This prevents the developers from ‘rolling’ these funds into other projects. The rolling of funds was a major reason for project delays in the past.
4. Verifying track record
Buyers can now opt for properties only from reputed developers who are complying with RERA norms and have a good track record and financial stability, which can be verified by buyers.
5. Transparent ads
Builders can now promote a project only after registering it under the Act. The unique RERA registration number has to be published with every advertisement/brochure, or in any kind of project promotion at all.
6. Carpet area clarity
The hitherto conventional practice of developers charging buyers on the basis of the super built-up area no longer works. Under RERA, the quoted price has to be mandatorily based on the carpet area of the property. What you see is what you get (and buy).
7. Altering norms
Around 2/3rd of the buyers’consent in a particular project is necessary in case the developer intends to modify the building or layout plans/specifications/liabilities in the project.
8. Payment plans
Home buyers can do due diligence before opting for a particular payment plan, a variety of which developers now offer — including flexi-payment, down-payment, possession-linked and construction- linked plans.
9. Cap on booking amount
Developers can only take 10%of the total property cost as a booking amount while the sale agreement is drafted at later stages.
RERA prohibits developers to acceptmore than this. If guilty of charging more than 10%, the developer potentially invites a penalty of imprisonment of up to three years.
10. Register brokers
As service providers to realestate consumers, property brokers are also liable for all deliverables committed by the developers they represent. Hence, they must register themselves with their respective state Regulatory Authorities.
11. Reliable redressal
The Act provides a strong redressal mechanism to consumers by imposing a penalty on developers/brokers for any breach of obligation. Buyers can file complaints against developers/ brokers which will mandatorily be resolved in a span of 60 days from the date of the complaint.
12. Structural defects
In case of issues within the building or apartment, such as inefficient plumbing, visible cracks, etc. in the initial five years after possession, developers are liable to rectify the defect in less than 30 days or else give compensation to the buyer.
13. Title documents
These vitally important documents were, more often than not, inaccessible to buyers before RERA. Now, they can scrutinize documents related to a project’s land title ownership on the RERA website.
14. End to prelaunches
RERA has put a complete halt to soft launches, pre-launches and any other interpretations of selling something which doesn’t exist as yet. As a result, speculators have now been pushed out and the market has turned extremely buyer-friendly.
While the progress of RERA implementation across states, barring a few, is going at a slower pace than predicted, it is definitely regaining the trust of buyers by consolidating the sector and doing away with unscrupulous players.
Courtesy:The writer Mr.Anuj Puri is Chairman, Anarock Property Consultants