If you are looking to buy real estate properties shortly then you must know about the RERA Act. This article will guide you to know about all the necessary information about this Act.
The RERA bill was passed on March 10, 2016, by the Rajya Sabha and at the Lok Sabha, it was passed on March 15, 2016. However, it came into progress from May 1, 2016. From the 92 sections of this bill, 59 sections were notified on May 1, 2016, and the rest came into force from May 1, 2017. In this act, the state and central governments are required to introduce their own rules.
The RERA Act was passed to benefit the consumers and the developers to maintain a proper practice of real estate business. Thus, the transactions between the buyer and the seller become fair and reasonable.
The Effects of RERA in Real Estate Prices
As it was expected, the prices of the real estate dropped down after the RERA Act came into action. There were several reasons behind the price drop such as lack of demand, demonization and huge unsold inventory. Thus, the developers decided to provide freebies and discounts to the customers.
Before the introduction of the RERA Act, the consumers are the one who suffered due to the costs, title, risk of quality and delays of the property. Developers used to take all the benefits and profits. However, the case is not the same now. The developers will have to be worried about all those issues that a customer used to face.
Furthermore, the customer can demand a premium from the developer to ensure the transfer of risk to the developer. These premiums cannot be absorbed by the developer but they can transfer them back to the consumers in price rising form.
Effects on Current Projects
The developers need to have all the information about the current project such as the amount deposited, allocation of money, and the timeline for completion, the original sanctioned plans and more. All of this paperwork should be certified by an architect, a practicing CA and an Engineer. Furthermore, the developer must have to make all the information public.
Additionally, the developers can handle a website for the consumers where they will upload all this information. Thus, the consumers will be able to make sure whether the property is RERA certified or not.
The Issue of Holding Delivery
Homebuyers used to face delayed deliveries due to the allocation of the funds into new projects, especially the projects that were constructed in the year 2010-2013. Under the RERA Act, the depositors will have to make a separate account. The home buyers will deposit their money into this account and it will be utilized for the construction of the property they have chosen. Besides this, the developers must have to gather additional information regarding the ongoing project. Thus, they will not be able to hold the deliveries willingly.
The Quality of Construction
The quality of construction is also a matter of concern for RERA Act. Under the Act, home buyers can claim the protection of 5 years after construction. So, if they find any quality issue in their property, they can ask the developer to consider it. A notice will be sent to the developer to rectify the quality without charging anything and within 30 days of receiving the notice.
Without registration of a property, promoters cannot sell or even advertise it. Thus, registration becomes mandatory for each property. Once a property is registered then the advertisement can be done along with the RERA registration number.
Registration of the Project
Under the Real Estate Regulator Authority Act, every property should be registered by the builders. Information such as the furnishing information, a copy of the legality, the financial statements and many other things should be included during the registration process. The builder will be provided with the registration number according to the project. Failing to register a current project can cause a heavy penalty for the builders.
Online Information Regarding the Project
After completing the registration process, the state regulatory authority will provide a Login Id and password to the builder. The builder will log in to the website of the regulatory authority using the credentials and upload all the information. The builder will have to update the information quarterly. If the builder fails to update the status of the authorized project, then they will be charged a penalty.
Advance Booking Amount
Since the implementation of the RERA Act, the builders cannot take more than 10 per cent of the project as an advance payment from the consumers. The advance payment for booking was also not fixed before this act. Most of the builders used to ask for more than 10 per cent of the project. The advance payment by the buyer will inclusive of the application fee and the other entire fee demanded by the promoter. However, the advance payment can be taken by the promoters only after they make an agreement of sale with RERA.
Therefore, you can see that the RERA Act was passed to make fair deals between the consumer and the developer. Many changes have occurred in the market because of RERA. Developers are trying to make compliances to avoid litigation. Projects are being constructed according to the demand delivery timeline has been relaxed. The procedure of buying a real estate property has been standardized. Thus, interested consumers won't be disappointed or hesitate to buy any project of their choice. Consequently, the Act will ensure efficiency; transparency and accountability are being maintained in real estate business.