Much like the implementation of GST for all industries, Real Estate Regulation Act (RERA) also seeks to protect buyer interests and enforce penalties on erring builders. It is the first real estate regulator for the fast-growing Indian real estate market. Though the Act was passed on 1st May 2016, the formulation and notification of its rules were given a year, following which RERA came into effect on 1st May 2017.
Relief for the homebuyer
RERA will be implemented by state regulators in every state. Here are some of the problems it will seek to overcome:
Project delays – The real estate industry in India is plagued by project delays. Rarely do projects get finished on time. Homebuyers have had to endure delays for as long as seven years even. There have been excuses and reasons given for such delays, ranging from regulation changes by authorities, fund diversion towards other projects, and opposition from local bodies that handle infrastructure development. Errant builders often sell apartments to buyers without plan approvals and poor construction quality.
No record of revenue from allottees– RERA states that builders will now have to provide details of revenue collected from the allottees. They will also have to describe how these funds were utilised, as well as provide a timeline for completion, construction and delivery, as verified by a recognised architect/engineer/CA.
What you should be asking
RERA will be responsible for addressing the above problems. For this, it is important to know the different provisions of this Act, so that you can ask appropriate questions to your builder:
- Find out all the real estate projects that the developers and builders are working on. With RERA, buyers will now have to communicate details about all their residential projects to buyers. This helps the homebuyer in understanding if the builder is overwhelmed with a number of projects.
- In the past, builders used to be guilty of changing original approved plans. Under RERA, builders will have to submit their original approved plans for current projects and also describe any subsequent alterations. Check for the plan approval from RERA for the project that you are interested in.
- Over the last few years, many buyers have realized that there is a vast gap between promise and reality, especially when it comes to quality of construction. Here the state regulator for RERA will be responsible for providing protection to buyers for a period of five years from the possession date. In case of any issue being highlighted to the regulator during this period, which may range from provision of services to construction quality, the developer will need to rectify the same within 30 days. So, be aware of your rights under RERA. Check the RERA website frequently.
- If the building company is unable to deliver the property within the designated deadline, it will be mandatory for them to return all the money submitted by buyers, along with the pre-decided interest rate given in the contract, based upon the model contract from RERA.
- If the buyer decides not to collect the money back, it will become necessary for the builder to pay interest on every month to the buyer until final delivery.
Times, they are changing in the real estate industry. With RERA, a homebuyer has a lot more power and authority than ever before. Awareness of that authority will give the frazzled homebuyer some breathing space.