While buying any real estate property there are various factors to be considered and risks involved. Government of India passed RERA Act in 2016. This act facilitates homebuyers, brokers, builders and other people involved in real estate. If a homebuyer knows about RERA Act before dealing in real estate it will help in avoiding possible risks.
Points covered in this article are
1. What is RERA?
2. Why is RERA necessary?
3. RERA rules given by government of India
4. Who is liable to be registered under RERA?
5. Benefits of RERA
6. RERA Registration
7. Grievance Redressal
1. What is RERA?
Real Estate (Regulation and Development) Act, 2016 sets up a Real Estate Regulatory Authority in every state to administer the Real Estate regulations. In 2016 the Housing and Urban Poverty Alleviation ministry introduced rules for Real Estate Regulation and Development Act.
2. Why is RERA necessary?
Before introducing RERA the real estate sector was unregulated and homebuyers suffered many losses because of builders and developers’ activities such as giving false information, low quality construction, delay in project completion. In order to protect the interests of homeowners, government established RERA through which there can be transparency in activities and investments into real estate sector can increase. Now with the introduction of the Real Estate Act, all the people involved in dealing with a real estate are accountable and answerable to the government if any conflict arises
3. RERA rules given by government of India
The central government of India has given certain rules to be followed under RERA rules but every state has the freedom to make rules as per their requirement
a. Protection of Homeowners
70% of homeowner’s money should be deposited into separate escrow bank account which can be used only for construction purposes. This is because in many cases the builders use the homeowner’s money and deposit it in a different project which leads to delay or conflict in the deal
b. Completion period
If builder delays in completion of project, the builder shall be penalised with 2% interest over the SBI lending rate and he can also be imprisoned for up to 3 years.
c. Defects in the project
If any defect arises in the project within five years after completion, the builder is liable to repair it without any cost
d. Approvals to be taken
Any approval to be taken on the project should be taken before the launch of the project. In case of structural changes, 67% of buyers should agree on this change
e. Transparency
Projects are sold on the basis of carpet area under RERA so the builder cannot manipulate the prices or charge higher. All the details of the project should be uploaded on the respective state regulator
4. Who is liable to register under RERA
Any new project has to be registered compulsorily with RERA if the land is over 500 square meter or has 8 apartments. The aim of registration is
· Boosting investments in real estate
· Protecting the interests of homeowners
5. Benefits of RERA for homebuyers
· Buyer will have to pay only fair price as the payment is on carpet area basis
· Completion of project on time
· Scams and fraud are reduced as the builder should disclose the project to RERA through the website of the respective state
6. RERA Registration
The online registration website is different for different states. The process of registration is similar
· Fill the application for registration and submit necessary documents
· After registration the builder will receive a registration number which is to be mentioned in every property sale
· Maintain proper books of accounts to show the progress to authorities
7. Grievance Redressal
Homeowners who have any complaints regarding the project can file a complaint with RERA. The authority shall try and solve the issue within 60 days of filing the complaint. If the buyer is not satisfied with RERA’s decision the case will be filed with Appellate Tribunal within next 60 days. If the tribunal’s decision is also not satisfactory, it can be filed with high court or Supreme Court
RERA guidelines may vary to some extent from state to state but the basic objective of this initiative is common to all states. In India due to the risks and frauds in real estate sector people were not sure of investing. The RERA introduction has drastically reduced risks of homebuyers
Frequently Asked Questions
1. What is the objective of RERA?
Real Estate (Regulation and Development) Act, 2016 was introduced with the objective to
· Boost real estate investments in India
· Protect buyers from scam and frauds
2. Is RERA registration mandatory for builders?
RERA registration is compulsory for those builders where the land is 500 square meters or number of apartments is more than eight
3. What if a builder does not register under RERA?
If the builder does not register the project, RERA shall take incharge of the whole project and makes sure that builder delivers what was stated to the buyer