What is RERA and It’s Importance
- January 27, 2020
Do you want to invest in a property in one of the metropolitan cities? Only a few can make costly investments in properties. People save their hard-earned money to buy a luxurious flat. The grievance of property buyers is not heard. To help and protect the interest of the buyers, RERA came into effect.
RERA stands for Real Estate Regulations Act. The Parliament of India passed this act. This act protects the interest of home buyers. With RERA, buyers will get the complete right to learn every detail of the project. They can get hold of associated documents related to the project.
Moreover, RERA would address issues like delays, construction quality, price, and other charges. This act provides a base for addressing the grievances of the buyers. It also listens to the developers.
Key Highlights of This Act
Some of the key highlights of this act are:
- Establishment of a Regularity Authority: The absence of a proper regulator had affected the real estate industry. The act established a real estate authority so that the developers could be put on check. The interest of the stakeholders remains protected. The authority gathers data at a deputed place. It creates a strong grievance redressal system.
- Compulsory Registration: Firstly, real estate projects need to be registered with RERA. The regulator would have jurisdiction over the projects. Moreover, on receiving complaints, RERA cancel the registration.
- Constant Disclosure by Promoters: Buyers can monitor the progress of the home redevelopment project. Project details should be submitted from time-to-time.
- Reserve Account for Project: Insufficient funds leads to the delay of projects. This act requires real estate developers to maintain a separate account for the project. From the amount received, only 70% of it is used for land and construction. However, professionals should certify the expenditure.
- Standardization of Sale Agreement: A standard model sale agreement is always between the buyer and the promoter. However, the agreement must be balanced.
- Penalty: When a builder or developer fails to obey the RERA orders, they need to pay a huge penalty.
How It Would Benefit Buyers and Others?
The RERA Act would benefit buyers, real estate agents, and promoters in the following way. They are:
- Calculate the carpet area with a standard formula. Promoters won’t be able to provide an inflated price.
- It reduces the risk of builder insolvency. In a separate account, 70% of the amount received must be kept.
- Both parties are required to pay the same interest amount.
- Within 5 years of possession, if there is any structural defect in the building, the builder would have to rectify it without charging any money.
- Buyers can claim compensation from the builder of they find any defect in the property.
- Builders won’t be able to take over 10% of the cost of the project.
These are some benefits of the RERA Act. Apart from boosting the real estate sector, it provides benefits to the buyers.
RERA brought about a typical shift in the way the real estate industry functions. This act won’t allow any developers or builders to exploit the buyers. The norms which must be maintained by the real estate sector should be mentioned. The norms are important for building or the development of real-estate projects. This would help to maintain transparency in the real estate sector.