On May 1st 2017, the Real Estate Regulatory Act (RERA,) came into existence which promises to shield honest home buyers from inefficient investors or builders.
The bill for the Act was first passed in the parliament in 2016 and approved by the government. The state and union territory authorities were ordered to form a regulatory body and set rules for real estate parties after which the Act would be implemented. Although by May 1st only 13 of the states and UTs had the regulations in place, still there seems to be a positive paradigm shift in the field of real estate. The states are Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Maharasthra, Madhya Pradesh and Bihar. While the Union territories are Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep. The Urban Development Ministry came out with the rules for the National Capital Region of Delhi.
Talking about the regulation, Housing and Urban Poverty Alleviation Minister M. Venkaiah Naidu said, “The Real Estate Act coming into force after a nine year wait and marks the beginning of a new era. The Act ushers in the much desired accountability, transparency and efficiency in the sector, defining the rights and obligations of both the buyers and developers.”
The benefits and the provisions of RERA include mandatory registration of projects and real estate agents, disclosing the project details on regulator’s website, quarterly updating on the progress and prescribing penalties on developers who delay projects. These provision aims to lessen the various difficulties faced by the consumers who want to buy real estate. The registration and regular update on the project ensure transparency while the penalty on delay ensures that the burden doesn’t fall on home buyers but on developers.
The builders are also required to deposit 70% of the funds collected from buyers in a separate escrow bank account for construction of the project. The money can be taken out only for construction purposes from this account. RERA also states that any structural or workmanship defects brought to the notice of a builder within a period of five years from the date of handing over possession must be rectified by the builder, without any further charge, within 30 days. Failing to do so, the buyer is entitled to receive compensation under RERA.
Developers also can’t invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority. There is an impending imprisonment of up to three years for developers and up to one year in case of agents and buyers as well for violation of orders of appellate tribunals and regulatory authorities.
With such secure measures against the corrupt developers, RERA ushers in an era of consumer friendly bills that will go a long way in ensuring the structural stability of India.
