The Real Estate (Regulation and Development) Act, 2016 (RERA), has been issued to protect the interests of home buyers and enhance transparency in the real estate sector. With this regulation, it will become increasingly difficult for the developers to con the homebuyers.
The Government of India enacted the Real Estate Regulation Act 2016 on 26th March 2016 and all its provisions came into effect from May 1, 2017.
This law literally helps future growth of the real estate industry in India as it has the power to stop unscrupulous transactions from taking place. The RERA regulation seeks to protect the interests of home buyers to further boost investments in the real estate sector. There are several benefits of this law for the buyers.
No more worries about exaggerated floor areas: Going forward with this, per square feet price, although will change, yet the overall cost of the property will not be impacted much. Imagine a builder is offering 800 sq feet at a price of Rs 4,000 psf. This translates to INR 32 lakhs as the total cost of the property. Now, developers will have to advertise the actual carpet area and thus have to transact on its price. Assuming the carpet area is 500 sq ft, the price has to be increased to keep the total cost the same as 32lakhs.
Faster development of your property: In the past, builders could finish their projects at the mercy of their own leisure and whims. With this act, RERA provisions would now may sure that they have stricter control on timely delivery of projects as well as management of funds. Under the new law, developers need to pay an interest rate of 2 percentages to the State Bank of India's lending rate to the homebuyers. RERA also prescribes imprisonment of up to three years for errant developers.
Your money stays with you and not the developers: Before the introduction of RERA, the risk on account of delays, quality, title, and changes in the project were all borne by the customer. The developer will have to transfer 70 percent money received from home buyers to an escrow account. This means that the developers will not be able to use your money to build another property.
All costs of defects and damages are to be paid by the developer: The builder will have to provide for any structural defect in the building for five years. However, the RERA rules do not specify the type of damage. This law also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter.
So, if you are getting a lucrative deal from small-time builders that are not registered under RERA it is likely that they are trying to sell off a property to you that if registered under RERA will cause them some serious damage. All in all, this regulation is a huge win for middle-class homeowners but be sure to check the registration of your developers before buying a house from them.