Real Estate Regulatory Act (RERA), aimed at protecting the interest of consumers in the real estate market, has been made operational since May 1st, 2017.
The act was announced by the government in 2016 and has high hopes attached to it with regard to bringing accountability and transparency in the real estate market. The act has been designed to ensure that the consumers don’t get the short end of the stick while dealing with the developers. Over the years, consumers from various parts of the country have raised concerns about late deliveries, cheating and other issues commonly faced due to malpractices by the developers. Hopefully, RERA will bring about the required change.
Let’s try to focus on RERA and its impact on the customers and the developers.
Consumers willing to purchase any ongoing or yet to be registered project will be provided with better protection under the banner of RERA since the terms of the project delivery will be dictated by the provisions of the act.
The pricing, however, may seem to be of concern as it is currently being impacted both by RERA as well as GST. It would take six to twelve months for the complete panning out of this process.
Under the act, a homeowner would now only pay for the property’s carpet area (area within the walls) and not any additional charges on the super built area which was the norm before implementation of RERA.
To ensure the protection of the consumer’s money in case of project failure, it has been made mandatory for the developers to deposit 70 percent of the money received in an escrow account. This also safeguards the consumer’s money from being used towards other projects. For withdrawal, approval from appointed chartered accountants and engineers will be required.
As per the Act, the developers, promoters, and builders would require the RERA registration number and website URL of RERA mentioned in order to promote/advertise any project. A time of three months has been given, failing which the marketing and selling will have to be stopped.
Additionally, with RERA, the developers need to produce all the necessary clearances, to sell their project. This is likely to decrease the malpractices in the real estate sector.
The developer’s liability to repair structural defects has been increased to 5 years from 2 years.
Thus, RERA will provide a window to check the credentials of any new real estate project to minimize risk and uncertainty and is believed will go a long way in reinstating the consumer confidence in the real estate market.