The Indian Government passed the RERA Act in May 2016 to make the home buying process more transparent and address the concerns of home buyers, builders, brokers, and other real estate industry stakeholders. Since its inception, RERA has implemented many reforms, and more are on the anvil. That is 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 or Real Estate Regulatory Authority, was created to bring transparency to the real estate industry and address the existing discrepancies and issues within it.
Why do we need RERA?
RERA has been put in place to guarantee that home buyers have a safe and transparent real estate market to invest in. It safeguards the interests of home buyers by setting up regulations for the sale of real estate and ensuring that developers abide by specific standards. Furthermore, it holds developers accountable for any delays or irregularities in their operations, as well as ensuring that developers keep proper records and that buyers are aware of their rights when investing in property.
With RERA in place, every builder or developer must inform home buyers of the progress of construction. They must also offer them keys to their property by the mentioned date. Lastly, they must 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 is 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 is 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 home buyers?
RERA benefits home buyers 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 based on 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 home buyers into a separate bank account. They can only use this money 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 filing it.
- 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 home buyers provide their 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
The guidelines define carpet area for a home or apartment as the area within the four walls of the house. This excludes 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.
- The respective state RERA must register all proposed projects exceeding an area of 500 sq. mt. or more than 8 apartments.
- Builders must deposit 70% of the project money collected from home buyers in bank accounts, through cheques. This makes it impossible to engage in fraudulent transactions or money laundering. This requirement ensures proper documentation and accountability for every rupee spent and gained.
- There will be one model sale agreement between all builders and home buyers.
RERA Act in different states of India
The RERA Act has been implemented in more than 22 Ind working towards solving complaints and disputes in each state.ian states and 6 union territories in the past two years, actively.
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 that they are found guilty.
- If promoters do not register under RERA, they must pay 10% of the project's estimated cost. Providing false information about the project will incur a charge of 5% of the project's estimated cost.
- 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 for conducting construction and sales on their project sans RERA registration. This charge is up to 5% of the cost of the project.
- 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 up to 1 year, or 10% of the project’s probable cost, or both.
RERA requires buyers to comply with its regulations. If you fail to do so, you will face a penalty of up to 5% of the approximate cost of the project each day. If you do not comply with the Appellate Tribunal, you could face serious consequences. A court can sentence someone to up to 1 year in prison or impose a penalty of 10% of the project's probable cost. Additionally, you may face both imprisonment and the penalty.
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 does not.
- Projects that do not have a completion certificate but were completed before the implementation of the RERA Act is a part of RERA.
- Projects that have undertaken construction for the purpose of renovation/ repair/ re-development, and are not re-allotting, marketing, advertising, selling, or allotting any apartments, plot, or building, will not come under the purview of RERA.
- Project that is 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 home 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 tenure 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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