RERA (Real Estate Regulation and Development Act) has been implemented by the government on 10th March 2016 with the primary objective of safeguarding homebuyers from fraudulent builders and channels of investments in the real estate industry. The following rules have been developed in order to encourage informed decision making by investors.
- For any developer launching residential property over 500 square meters or eight units, it has been made mandatory to register the project with RERA and upload all the information related to the said project on the RERA website before any sale initiation is made.
- This Act also mandates developers to deposit 70 percent of the total sum collected from buyers into a separate bank account reserved for each project and two-thirds of buyers in that project must approve any alteration suggested by the developer in the layout or plans.
- The major benefit for customers included in the Act is builders will have to quote prices based on carpet area, not super built-up area.
- State-level Real Estate Regulatory Authorities (RERAs) to monitor transactions related to both commercial and residential projects and ensure the timely completion and handover of the property.
How will RERA impact homebuyers?
- Increase in the quality of construction due to a defect liability period of five years.
- Homebuyers could have more visibility into the projects that they are considering to associate with.
- The major benefit of this Act is that it provides a unified legal regime for the purchase of buildings. It aims to standardize this practice across the country.
RERA aims to bring transparency and accountability in the unstructured real estate sector. RERA has provisions to penalize both the developer and promoter for late-payments and delayed construction. Further, in case of violation, the developer risks the imposition of heavy penalties and even losing their developer registration.
Thus, we can say that RERA is a step towards reforming India’s real estate market, enabling greater transparency, customer-centricity, accountability, and financial discipline.