What is RERA?
To protect the interest of homebuyers and take appropriate action against errant builders, the Indian Parliament has enacted RERA or the Real Estate Regulation Act in 2016, which came into force on 1st May 2017.
With a big aim to bring transparency in the home buying process and sort out the problems between the developer and the customer, RERA specifies some rules and guidelines to be followed. As an incredible platform to address the grievance of the homebuyers belonging to each state, a regulatory body will be set up in each Indian state and Union territory.
What are the benefits of RERA?
- As an easy-to-reach grievance redressal system, RERA can bring about positive changes in the Indian real estate market.
- RERA is well-designed to reduce unwanted delays in completing housing projects. The act also curbs the mis-selling and strict actions will be taken against people involved in mis-selling.
- Rules and guidelines framed by RERA are applicable to both commercial and residential properties.
- Each state has its own regulatory body to address the issues of people belonging to each state, making the redressal system more efficient.
- With RERA in place, the Indian real estate market became more accountable and transparent.
A quick glance at the impacts of RERA in the Indian real estate market
- As stated above, rules formulated by RERA is to bring transparency in every transaction. Hence, every builder should disclose the details concerned with each project to the homebuyer. Moreover, they must update information regularly on RERA’s official website to make it available for homebuyers.
- According to RERA, builders are not allowed to charge homebuyers for the super built-up area of a building. The cost of constructing amenities like lifts, lobbies, and stairs cannot be charged from the homebuyers.
- The rule directs developers and builders to put 70% of the purchase price in a separate escrow account to meet the future renovation and construction requirements.
- Completion of housing projects on time is the biggest impact of RERA. The regulatory body strictly directs that any delay caused by the developer make the homebuyer eligible to get an interest rate of 2% over SBI’s MCLR.
- The homebuyer is given a special privilege to ask the developer to rectify the construction defects for a period up to 5 years after the property is handed over to the buyer.
- The RERA also limits the advance amount collected from homebuyers to not to exceed 10% of the purchase value.
- And the most important of all the disputes between the developer and homebuyers should be resolved within 120 days after filing the complaint.
In a nutshell, the formation of a common platform for both buyers and developers offer equal opportunities for them to share their views. As one of the fastest-growing sectors in India, the real estate sector faces a series of challenges ranging from project delays to money laundering and poor quality in construction. RERA is meant to bring transparency and best practices in the sector. In short, the act can protect the interest of homebuyers and take action against errant builders.
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