The Real Estate (Regulation and Development) Bill was passed by Rajya Sabha in March 2016. This bill requires property transactions to be subject to Real Estate Regulatory Authority (RERA) will be established by each state.
In order to facilitate an informed decision-making process by real estate investors, it has been made mandatory for any developer launching residential property over 500 square meters or eight apartments to register the project with RERA and upload all the details pertaining to the said project on the RERA website before any initiation for sale is made.
Comprehensive records from conceptualisation to completion of every project will be maintained to ensure the consumers make sound investments in the real estate sector. To further provide strength to this, Appellate Tribunals will be set up in each state to adjudicate and deal with real estate disputes. RERA will be a sigh of relief for the consumers by eliminating the hassle of approaching the Courts for these disputes.
This Act also requires the developers to deposit 70 percent of the total amount received from the buyers in a separate bank account earmarked for each project and any change the developer proposes in the layout or plans must be approved by two-thirds of the buyers in that project. This has been done to safeguard the interest of the buyers and to make sure that they do not have to bear the brunt on account of any transaction going awry. It has been noted that it is common practice for the developers to divert monies received on one project to more lucrative ones which may lead to delays in construction and changes in layouts as a result of which the buyer has no option but to compromise.
RERA has provisions to penalize both the developer and promoter with similar interest rates for missed payments and delayed construction. Further, in the case of violation, the developer risks the imposition of heavy penalties and also losing their developer registration.
Thus, RERA provides 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.