In May this year, the much anticipated Real Estate Regulation Act (RERA) finally came into effect on May 1st, 2017. This was music to the ears of long-suffering property buyers who have been traditionally, completely at the mercy of property developers and builders. The process of having a home to your name is currently fraught with worry, unending negotiations, and the constant zing of deadlines whooshing by.
RERA promises to make this process into a more joyful one for the buyer by bringing in transparency and answerability. The Act is also expected to unify the fragmented real estate industry in India into a more organised and defined one. The buyer-centric Act seeks to make transactions between buyers and builders more transparent, streamlined, and straightforward.
So, how is the builder going to make projects RERA compliant? And how is the buyer going to recognise a RERA compliant home? Here are some pointers.
The square meters matter
If a property is more than 500 square meters, builders have to register it with RERA before they launch or even advertise a project on that property. Builders are expected to put up all details of the project, including phase divisions, expected delivery dates, blueprints, costs, and agreements on the RERA website.
Where are the funds going?
Builders will have to show proof that they have deposited 70% of the payment from the prospective buyer into a separate escrow account for the home they are buying instead of using it for new investments.
Approvals beforehand
No more ‘pre-launch offers’ and ‘discounts for early bookings’. Builders are now expected to obtain all necessary approvals before they advertise a new project in the offing, offering more power and peaceful nights to buyers. This puts an end to the practice of advertising apartments and raising funds even before finalising the land for the same. Prospective buyers can now ask for all approval documents from the builder before they decide to invest in a property.
Fixed prices
Reworked agreement rules between builders and buyers ensure that there are no more meaningless price increases thrust onto the buyer. The final amount, with all inclusions, to be paid by the buyer will be stated clearly in the agreement and will act as the binding figure preventing arbitrary escalations in the future. The figure in the agreement will also be doubly verified and carry the approval of the architect in charge, the chief engineer, and the building company’s chartered accountant.
No more delays
Currently, buyers are traumatised by long delays and apartments or houses delivered with many aspects incomplete. Under RERA compliant projects, the builders have to show timelines for each phase of the project and ensure timely completion. Once the occupancy certificate has been obtained, the builder has to make the document available to the buyer within three months.
Evidently, RERA makes life smoother for buyers and forces developers to get their act together. But so far only nine states and six union territories in India have come forward with their respective Real Estate Regulations. The rest of the country has till July 31st to set up processes and comply with RERA.
What are buyers and builders to do until then for ongoing projects begun in the pre-RERA era? The most important step for builders is to apply for the registration of the project and for buyers to ask for the project’s registration number which will be available even if it is in the process of being registered.
Although the full impact of RERA will only be felt two to three years hence, buyers now have a basic safety net that makes home buying an easier and more optimistic affair. At least now, homebuyers can check the RERA website for all details about the project they are interested in investing. And if you still are unsure, RoofandFloor is here to help you with expert advisors who bring with them years of experience in the real estate industry.
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This article was originally published on www.thehindu.com