To facilitate transparency in the home buying process, the Indian Government passed the RERA Act in May 2016. Soon after, RERA was brought into action to address the concerns of homebuyers, builders, brokers, and other stakeholders of the real estate industry. Since its inception, RERA has implemented many reforms, and more are on the anvil. That’s why, as a home buyer or a builder, knowing RERA rules and guidelines will help you navigate the real estate landscape with ease.
So, take a closer look at RERA, its impact and more.
What is RERA?
RERA, the full form of which is Real Estate Regulatory Authority, stands for transparency in the real estate industry. It was brought to action to eradicate the existing discrepancies and problems within the sector.
Why is RERA (Real Estate Regulatory Authority) needed?
Per the RERA Act, RERA committees have been set up across India to promote uniformity and transparency and regulate the real estate sector. To know more you can look up RERA Karnataka, RERA Delhi, RERA West Bengal, RERA UP, RERA Punjab, RERA Goa, etc.
With RERA in place, every builder or developer must inform homebuyers of the progress of construction, offer them keys to their property by the mentioned date, and abide by every rule outlined by RERA to ensure accountability.
Key benefits offered by RERA
RERA has brought about a positive change in every facet of the real estate sector. Here’s how:
- RERA aims to reduce project delays and property fraud. To do so, authorities have made it mandatory for all builders/ developers to carry out RERA registration before they start a project.
- RERA has been sub-divided into smaller regulatory bodies, each of which looks after the real estate development in a single state or union territory in India.
- RERA rules apply to both residential and commercial properties.
- The standardisation brought about by RERA aims to protect the interests of buyers and developers alike.
- The RERA Act has brought about more accountability and transparency within the real estate industry.
How will RERA impact homebuyers?
RERA benefits homebuyers in several ways. Take a look at what they are.
- With the implementation of RERA’s rules, builders must disclose every detail of the project they have undertaken on RERA’s official website.
- More importantly, they have to update this information on a regular basis. This assures buyers of transparency regarding project timelines.
- Per RERA rules, you have to pay for the property on the basis of the carpet area or the area enclosed by walls. Builders cannot charge you for the super built-up area that includes lifts, balconies, stairs and lobbies.
- Builders have to put 70% of the money they collect from homebuyers into a separate bank account, which they can only use for construction purposes.
- RERA lays emphasis on timely completion of projects. Any delay means that the developer has to pay you interest of 2% over SBI’s MCLR for the period of delay.
- After you get a handover, you can report construction defects for up to 5 years and have the developer rectify them.
- Developers have to resolve disputes with buyers within 120 days of it being filed.
- The developer or builder cannot make alterations or additions to the building plan without informing two-thirds of the owners about such a change. It can only proceed if a majority of homebuyers consent.
- The Act prohibits developers from taking more than 10% as advance from home buyers.
- If at the time of possession, you discover a discrepancy in your title deed, you can immediately ask for compensation from the developer.
Carpet area defined under the RERA Act
Per the guidelines, carpet area for a home or apartment is defined as the area within the four walls of the house. This cannot include the amenities or common area measurements usually included in the super built-up area.
How will RERA impact real estate agents?
With RERA coming into effect, builders and developers have to be more transparent. Here are the ways in which RERA impacts real estate.
- All proposed projects exceeding an area of 500 sq. mt. or more than 8 apartments must be registered with the respective state RERA.
- It is mandatory for builders to deposit 70% of the project money collected from homebuyers in bank accounts through cheques. This means builders can no longer engage in fraudulent transactions or money laundering. Every rupee spent and gained has to be accounted for.
- There will be one model sale agreement between all builders and homebuyers.
RERA Act in different states of India
Two years have passed since the RERA Act was passed and currently more than 22 Indian states and 6 union territories follow it. Not only has RERA been implemented, but it has also actively worked towards solving complaints and disputes in each state.
For instance, MahaRERA or RERA Maharashtra, has received around 6,631 complaints (as of April 2019) and has resolved 64% disputes. Following suit are other states like West Bengal, Manipur, and Assam that are gearing up to launch their RERA websites.
What are the penalties under RERA?
As a home buyer, you can register a complaint with RERA or the Appellate Tribunal. Based on the offence you mention, the developer or promoter is charged a penalty. Here is a list of penalties applicable in case they are found guilty.
- Promoters have to pay 10% of the project’s estimated cost if they do not register under RERA. Moreover, they are charged 5% of the project’s estimated cost if they are found giving out false information related to the project.
- For promoters, violation of laws can lead to imprisonment for up to 3 years or cost them 10% of the project’s estimated cost.
- Agents are charged Rs. 10,000 per day up to 5% of the cost of the project, in case they are found conducting construction and sales on their project sans RERA registration.
- Severe non-compliance with RERA will require developers to pay a daily penalty of up to 5% of the project’s probable value.
- In case of non-compliance with the Appellate Tribunal, the penalty is imprisonment for up to 1 year, or 10% of the project’s probable cost, or both.
Moreover, buyers too have to abide by RERA. If you’re found guilty of non-compliance, you will have to pay a daily penalty of up to 5% of the approximate cost of the project. On the other hand, non-compliance with the Appellate Tribunal can lead to imprisonment for up to 1 year, or 10% of the project’s probable cost, or both.
How to register projects under RERA
If you wish to register a project under RERA Arunachal Pradesh, RERA Sikkim, RERA Haryana, RERA Kerala, or any other state, follow these steps:
- Open a bank account as specified by Section 4 (2) (I) (D) of the RERA Act and then collect all the necessary documents.
- Fill and submit Form A, the form for RERA registration. As a promoter or agent, you will also have to submit Form B, declaring your role within the real estate industry.
- Apart from this, you may have to submit other forms as per RERA rules to clarify your project’s details.
- Pay the RERA registration fees to complete the registration process. This amount varies from state to state.
- Once registered, use the RERA number allotted to you and the project for all future communication.
Projects that come under RERA
Once all states and union territories comply with RERA, all real estate projects will come under its purview. In the interim, take a look at a few conditions that determine when a project falls under RERA and when it doesn’t.
- Projects that do not have a completion certificate, but were completed before the implementation of the RERA Act are a part of RERA.
- Projects that have undertaken construction for the purpose of renovation/ repair/ re-development, and aren’t re-allotting, marketing, advertising, selling or allotting any apartments, plot or building, will not come under the purview of RERA.
- Projects that are under construction have to report each phase of construction as a standalone project through a fresh RERA registration.
As a home buyer it is important for you to select a RERA registered project, to make a safe investment and eliminate any possible losses. Additionally, apply for a cost-effective home loan to simplify and economise the home-buying process. For instance, you can apply for a housing loan of Rs. 5 crore* or higher based on eligibility from Bajaj Finserv.Apart from getting access to a hefty sanction on a competitive interest rate, you can also enjoy a flexible tenor and other benefits. Moreover, you can apply for the loan under PMAY and get CLSS benefits of up to Rs. 2.67 lakh. Best of all, easy home loan eligibility criteria and minimal documentation requirements make this loan very easy to apply for. To get started, simply check your pre-approved offer and choose a customised loan deal that fits your needs.
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