In this post: we cover the important aspects of the RERA act and how the RERA act has changed the real estate landscape. We mention the points and clauses of the act and its individual benefits to home buyers.
What is RERA and how does it help you, the home buyer?
The RERA Act (The Real Estate Regulation and Development Act) was designed with
homebuyers in mind and the act protects home buyers and also drives a much necessary
structure and transparency to the real estate industry in India.
The idea behind the RERA act is to make transactions, procedures, and information process
completely transparent. On the top, the RERA act might seem like a disciplinary action, but it closely monitors projects and forces builders to adhere to the rule of law.
The hope for RERA has always been to be the first step in regulating the modern real estate
industry in India and boost home buyer confidence in the real estate market.
Why builders have to register all their projects with RERA
With the introduction of RERA in 2016, now you, the home buyer can visit your state’s RERA website to check, research, and verify a list of builders and promoters with registered projects on the site. Why does this matter? Once builders register projects under RERA, they have to adhere to strict timelines to finish projects and hand them over to the buyers on time.
If ever there’s a case of fraud or incessant delays, you can hold the builder accountable in the court of law because of the RERA act. Here’s a fact you should know, if the builder does not register projects under RERA, they will end up paying 10% of the project cost as a penalty for non-adherence. Repeat offences lead to jail time for builders and promoters as well.
How RERA limits fund utilization from revenue for builders
We have heard cases of builders who utilize project revenue elsewhere than re-investing it to complete the project. To put a stop to this behaviour, the RERA act says that builders and promoters have to set aside 70% of the revenue in an escrow account purely to use the funds to complete the project.
This means that builders cannot reroute funds to fund other projects without completing the said (current) project. The escrow account set up to accrue the 70% of revenue is obliged to be certified by chartered accountants.
RERA forces builders to share more valuable information about each project
The RERA act has set a certain set of rules which need to be followed by builders and
promoters. A case in point is where the builders have to disclose information about the project such as the following:
● Types of buildings in the project
● Maps and blueprints of the project
● Complete payment schedules
● Details about each and every promoter involved in the given project
Also, builders will have to update the status of the projects once in three months (quarterly) without fail.
RERA protects home buyers from project delays
Say if your property is not delivered on time by the builder (as per the date of possession in the sale agreement), a specific rate of interest (as mentioned in the sale agreement) has to be paid for by the builder/promoter to the buyer.
RERA does not spare defaulting builders
Builders and promoters who fail to adhere to RERA’s rules and regulations will be subject to three levels of punishments:
● Builders and promoters will lose their registration
● Face up to three years of imprisonment
● And up to 10% of the total project cost as fine/penalty
This aspect of RERA deals a major blow to defaulting builders. This enables home buyers to
take legal action when written promises aren’t delivered.
How RERA enables quick refund from project exit
When and if builders fail to deliver properties as per the date of possession mentioned in the sale agreement, home buyers have the right to claim refund along with interest as
mentioned in the sale agreement. There are chances that the builder might lose his/her
license as a result of the delay, as well.
Let’s say, you, the home buyer does not want to withdraw from the project, in this case, the builder has to pay the stipulated interest every month of delay to you (the buyer) till you get the possession of the property completely. Though these rules existed before, the inclusion of this clause under a single act (RERA act) makes the process of delivery of justice even quicker and smoother.
Conclusion: what it means to you, the home buyer
Though RERA protects and works for you, the home buyer, it is your (home buyer)
responsibility to conduct due diligence before investing your hard-earned money on any
given property/project. We at HousingMan have worked tirelessly with top class real estate
brands who value the RERA act and transact transparently. Our trained, experienced real
estate consultants have in-depth knowledge about each project. Visit our homepage and
explore RERA approved properties now. Or, just talk to our consultant for any info about your real estate requirements at +91 9108456096.