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With the rising real estate prices in India, a Home Loan is the only way through which most people fulfil their dream of buying a home. To better meet the needs of the borrowers, lenders in India now offer different types of Home Loans.
What is the RERA Act?
RERA stands for Real Estate Regulatory Authority that came into existence as per the Real Estate (Regulation and Development) Act, 2016, with the purpose of protecting the home purchasers and also boosting the real estate investments. This bill of the Parliament of India Act was passed on Mar 10, 2016 by the Upper House (Rajya Sabha). The RERA Act was effective on and from May 1, 2016. At that time, out of 92 sections, only 52 were notified. All the other provisions were effective on and from May 1, 2017.
Some Important points under RERA:
Security:Under the RERA Act, a minimum of 70% of the buyers’ and investors’ money will be kept in a separate account. This money will then be allotted to the builders, only for construction and land related costs. Developers and builders cannot ask for more than 10% of the property’s cost as advance payment, before the sale agreement is signed.
Transparency:Builders are supposed to submit the original documents for all the projects they undertake. Builders are not supposed to make any changes to the plans, without the consent of the buyer.
Fairness:RERA has now instructed developers to sell properties based onthe carpet areaand not the super built up area. In the event that the project has been delayed, buyers are entitled to get back the entire money invested.
Quality:The builder must rectify any issue faced by the buyer within 5 years of purchase. This issue must be rectified within 30 days of the complaint.
Authorisation:A regulator cannot advertise, sell, build, invest, or book a plot without registering with the regulator. After registration, all the advertisem*nts for investments should bear a unique project-wise registration number, provided by RERA.
RERA has a number of benefits for the buyer, the promoter and the real estate agent.
These include:
Benefits of RERA:
Standardisation of the carpet area:Before RERA, the manner by which a builder calculated the price of a project wasn’t defined. However, with RERA, there is now a standard formula that is used to calculate the carpet area. This way, promoters cannot provide inflated carpet areas to increase the prices.
Reducing the risk of insolvency of the builder:Most promoters and developers tend to have multiple projects being developed at the same time. Earlier, developers were allowed to move funds raised from one project to another. This is not possible with RERA, since 70% of the funds raised need to be deposited in a separate bank account. These funds can be withdrawn only after certification by an engineer, a chartered accountant and an architect.
Advance payment:As per the rules, a builder cannot take more than 10% of the cost of the project from the buyer as an advance or application fees. This saves the buyer from having to source funds fast and pay a large amount.
Rights to the buyer in case of any defects:Within 5 years of possession, if there is any structural defect or problem in the quality, the builder has to rectify these damages within 30 days, at no cost to the buyer.
Interest to be paid in case of default:Prior to RERA, if the promoterdelayed possession of the property, the interest paid to the buyer was much lower than if the buyer delayed payment to the promoter. This has changed with RERA and both parties have to pay the same amount of interest.
Buyer’s rights in case of false promises:If there is a mismatch in terms of what was promised by the builder and what has been delivered, the buyer is entitled to a full refund of the amount that was paid as advance. At times, the builder may have to provide interest on the amount as well.
Right to claim the compensation:If at the time of possession, the buyer discovers that there is a defect in the title of the property, the buyer can claim compensation from the promotor. There is no limit to this amount.
Right to information:The buyer has the right to know all the information about the project. This includes plans related to the layout, execution, and completion status.
Grievance redressal:If the buyer, the promoter or the agent has any complaints with respect to the project, they can file a complaint with RERA. If they aren’t pleased with RERA’s decision, a complaint can also be filed with the Appellate Tribunal.
How do I ensure that a property is RERA compliant?
If the area of the property is more than 500 square meters, the builders should register it under the RERA Act, before launching or advertising a project on that particular property.
Builders must provide proof that 70% of the total payment has been deposited by them into a discrete Escrow Account instead of using it for some other investment.
Builders must get all the necessary consent before advertising a new project. Discounts for early bird bookings and pre-launch offers will not be there anymore.
How do I find RERA approved projects?
Answer specific for the State of Maharashtra
Under the ‘Registration’ tab, click on ‘Registered Projects’. Under ‘Search Project Details’, select ‘Registered Projects’
Type the name of the project and click on ‘Search’.
The project, along with its details will appear in the search results. On clicking ‘View’, you can see various details of the project, including the locality, project type, ongoing status and proposed completion date.
What is the RERA Act?
Some important points under RERA
Benefits of RERA
How do I ensure that a property is RERA compliant?
How do I find RERA approved projects?
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