The Real Estate (Regulation and Development) Act (RERA) has come into effect on May 1. Here’s everything you need to know on the matter
Compiled by Rochelle Dsouza Photos: Various sources
May 1 marked the commencement of the much-awaited Real Estate (Regulation and Development) Act (RERA) that is expected to usher in an urban renaissance in India. There is a certain palpable sense of excitement among all the stakeholders as 2016 ended on a dismal note for the real estate sector, thanks to demonetisation.
The Real Estate Regulation (and Development) Act of 2016 was put into place to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector> The act also aims to ensure sale of plot, apartment of building, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector as well as to establish an adjudicating mechanism for speedy dispute redressal. Once in place, RERA will ensure the establishment ofan Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority.
Key provisions of RERA
- The promoter of a real estate development firm has to maintain a separate escrow account for each of their projects. A minimum 70 per cent of the money from investors and buyers will have to be deposited. This money can only be used for the construction of the project and the cost borne towards the land.
- RERA requires builders to submit the original approved plans for their ongoing projects and the alterations that they made later. They also have to furnish details of revenue collected from allottees, how the funds were utilised, the timeline for construction, completion, and delivery that will need to be certified by an Engineer/Architect/practicing Chartered Accountant.
- It will be the responsibility of each state regulator to register real estate projects and real estate agents operating in their state under RERA. The details of all registered projects will be put up on a website for public access.
- RERA talks about the quality of construction in projects. Over the last few years, buyers have protested about poor of flats. The regulator will ensure protection to buyers in this matter for five years from the date of possession. If any issue is highlighted by buyers in this period including in quality of construction and provision of services, the developer will have to rectify the same in 30 days.
- Developers can’t invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority.
- After registering the project, developers will have to furnish details of their financial statements, legal title deed and supporting documents.
- If the promoter defaults on delivery within the agreed deadline, they will be required to return the entire money invested by the buyers along with the pre agreed interest rate mentioned in the contract.
- If the buyer chooses not to take the money back, the builder will have to pay the buyer monthly interest for each delayed month till delivery.
- After developers register with the regulator, a page will be created for the builder on the regulatory authority’s website. The developer is required to upload all the information regarding the registered projects on a quarterly basis.
- To add further security to buyers, RERA mandates that developers can’t ask more than 10 per cent of the property’s cost as an advanced payment booking amount before actually signing a registered sale agreement.
- The regulator will have the power to fine and imprison errant builders based on a case by case basis. The imprisonment can go up to a period of three years for a project.