Tarun Jain is a frustrated young man, restlessly fiddling with his phone as he waits at the corporate office of the builder. The office is swanky, cushioned bean bags jostling with plush sofas. A phone rings incessantly somewhere in the background. The AC hums. A pile of papers sits on the table in front of him. Bank loans, statements, and registration certificates. The entire bureaucracy that comes with Indian real estate. It’s been two years since he thought he would be moving into his own home.
Two years of waiting while the builder has extended the deadline for possession. Two years of phone calls and follow-up emails. Weekends spent arguing with the builder. Weekdays spent paying rent over the monthly payments for a house he is yet to move into. And a house that he doesn’t know when he will move into.
Tarun’s story is not unique. It’s a story that is familiar. It’s a story that the Real Estate (Regulation and Development) Act, 2016 (RERA) is seeking to change.
Bringing in Transparency
RERA is one of the most significant Acts passed by the Indian government and when it came into full effect from this month, it is hoping to bring in transparency, commitment, and protect the interests of the frazzled Indian homebuyer.
After decades of being at the mercy of unscrupulous builders, homebuyers in India can now look forward to a more hassle-free home buying experience. And here’s how:
Possession Date to be Sacrosanct
For those like Tarun, this is one of the most redeeming features of the new Act. Under RERA, builders must specify a date of possession in the sale agreement and the rate of interest in the event of a default. No more enduring frustrating project delays.
It’s the Carpet Area. Not the Built-Up Area
One of the most welcome provisions for homebuyers is that RERA specifies that a property can only be sold based on the carpet area and not the super built-up area. This means that the homebuyer is only paying for the space he actually lives in, excluding area covered by external walls, space in service shafts, exclusive balconies, verandahs or open terrace areas. Developers also can’t tamper with the design after the sales agreement has been signed without written consent of the buyer.
Information at Your Fingertips
“When I want to contact the developers, the sales guy is conveniently busy. Emails are never answered. I am sometimes stuck wondering what is happening with my house,” says Narendra Prabhu, an NRI who has invested in an apartment in Nungambakkam, Chennai.
Narendra need not worry about running behind disappearing sales or marketing persons. People like Tarun need not wait endlessly in plush corporate offices for elusive post-sales discussions. In fact, builders or developers are not allowed to invite, advertise, sell, offer, market or book any plot, apartment, house, building without first registering with the RERA authority. Now, builders will have to maintain everything related to the project on a website with periodic updates on the status of the project and approvals granted. People like Tarun can look forward to enjoying more of their weekends!
Power to the Buyer
“We bought an apartment after a lot of searching. The builder had promised us ‘luxurious living.’ What we got was leaking pipes, shoddy workmanship, and substandard fittings. The swimming pool is still under construction. And the so-called world-class gym has just one treadmill. This is not luxury. It’s not even budget living! It doesn’t matter who we approach – the builders just don’t care after they got our money,” complains Anuja Talwar, who along with her husband, bought a 3-bedroom unit in Bangalore earlier in 2016.
Anuja need not suffer in silence any longer. Unhappy with the quality of construction? Undue delays despite all the agreements? Power is now vested with the long-suffering homebuyer. The Regulator appointed by the State can protect buyers in this matter for five years from the date of possession. Any repairs, if sanctioned, would be free of cost to the buyer.
Builders can be fined by the Regulator, lose registration of the project, or even imprisonment for a period of up to three years.
Accountability
One of the biggest concerns before RERA was that funds for a project would often be diverted elsewhere, leading to shoddy work or delays in completion. Now, builders will have to park at least 70% of the funds realized in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost. This amount can only be utilized for that purpose.
Builders also have to ensure that they have obtained an all-clear on all important paperwork such as legal title deeds and supporting documents. Further, the builder has to submit to the Regulator a written affidavit that the land for the project is free from all encumbrances.
The Party Has Just Begun
RERA sounds like it would bring in a revolution in the real estate industry. Barriers lie ahead in terms of its actual implementation in different states in the country. There are loopholes and there will be flaws that can be exploited still. But for now, the first step has been taken. Homebuyers are being empowered. The onus is now on builders to build trust and transparency. Clarity is the focus of RERA but that clarity can be masked very quickly if the Act is diluted. The Taruns and the Narendras and the Anujas can breathe just a little bit easier for now.
This article was originally published on www.thehindu.com dated July 8,2017
