For the uninitiated, RERA stands for Real Estate Regulation Act…the latest move by the Modi government that hopes to bring transparency and fair practices back to a sector that was otherwise infamous for its white-to-black ratio of 70-30 or 60-40. In other words, the real estate sector had almost made it impossible for an honest man to buy an honest abode with some honest cash, which will hopefully now become regulated thanks to the latest regulatory act — RERA!
Thus, the Real Estate (Regulation and Development) Act that was passed in Parliament in 2016 and which came into existence yesterday in 13 states and Union Territories is slated to being about a paradigm shift, in favour of honest home-buyers. Thus, the most important tenet of RERA is its customer-centricity, wherein the regulatory framework will seek to address issues like delay in construction projects, fluctuating prices, quality of construction, titles, etc.
As of now, the states and Union Territories that have notified the rules include Uttar Pradesh, Bihar, Gujarat, Odisha, Andhra Pradesh, Madhya Pradesh, Bihar, Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Lakshwadeep and NCR.
The following are the key highlights of the latest move that is expected to bring respite to both customers and legitimate builders, namely:
Registration
The key feature of the RERA is the mandatory registration of both construction projects and real estate agents. This will help protect the public from duplicitous dealings in an otherwise unregulated market that had more than 76,000 player companies across the country. [Note: All projects with a minimum plot size of 500 sq. mt. or eight apartment has to be registered.]
Deposit
Builders would be required to deposit 70 percent of the funds that have been collected from buyers in a separate bank account, which can only be withdrawn for construction purposes. This will help prevent builders from siphoning off funds or diverting funds elsewhere.
Taking Care of Delays
The greatest respite that comes to the sector is in terms of overcoming delays by associating a penalty clause for both buyers as well as builders, who will both be required to pay the same penal interest in case of delays.
Developer’s Liability
In order to ensure the structural soundness of the project, the developer will now have to bear liability for structural defects for five years.
Penal Clause
The regulatory framework also provides for punishment and penalty for errant builders, including the provision of financial compensation in case of delayed delivery.
Needless to say, these provisions are touting to bring in a new era for the real estate market that had seen a slump post the demonetisation drive. This Act is an affirmative step — that has come post a long waiting period of nine years — towards bringing in both transparency and accountability by spelling out the rights and duties of both the seller and buyer. Thanks to RERA…we may possibly say goodbye to the (in)famous latin phrase ‘Caveat Emptor’ … or ‘Let the Buyer Beware’…Thus, bringing in the dawn when the buyer can finally relax in his humble home!
