Summary: The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to regulate and promote transparency in India’s real estate sector. It mandates the registration of real estate projects and agents at the state level, ensuring accountability and safeguarding consumer interests. The act aims to streamline project execution, establish a dispute redressal mechanism, and set up an Appellate Tribunal for resolving appeals. Among its benefits, RERA standardizes carpet area calculation, eliminating varied methods that previously inflated property prices. It mandates project registration and accurate disclosures by developers, fostering transparency. Promoters are restricted from altering approved layouts without the consent of at least two-thirds of allottees, ensuring buyer confidence. Developers are held accountable for structural defects for up to five years post-possession, with provisions for rectification or compensation. The act protects buyers against project delays, offering refunds or interest for extended timelines. It curbs misleading advertisements by requiring accurate disclosures and regulates fund utilization by obligating developers to deposit 70% of collected amounts into dedicated accounts for specific projects. RERA also restricts the collection of advance payments beyond 10% of the property cost before signing and registering the sale agreement. Additionally, project rights cannot be transferred to third parties without the consent of two-thirds of buyers and regulatory approval. Buyers can raise grievances with the Real Estate Regulatory Authority or escalate matters to the Appellate Tribunal. By ensuring transparency, accountability, and buyer protection, RERA has significantly improved trust in the real estate sector.
A.Overview of RERA Act
- Real Estate (Regulation and Development) Act, 2016 was enacted by the Parliament of India in 2016.
- It provides registration of real estate projects by promoters before launching any real estate project to ensure transparency in project marketing and execution and real estate agents involved in selling and purchasing of properties.
- It is a state level act so registration is required to be taken in respective state by promoters and real estate agent.
B.OBJECTIVES OF IMPLEMENTATION
- Regulating and promoting Real estate sector
- Protecting interest of consumers in real estate sector
- Ensuring sale of plot, apartment of building or sale of real estate project with efficiency and transparency
- To establish an adjudicating mechanism for speedy dispute redressal
- To establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority
C.BENEFITS PROVIDED TO BUYERS
Its been 9 years since RERA Act has been started and in these years it has provided much benefits to buyers.
Know some of those benefits from this article.
1.STANDARDIZING CARPET AREA CALCULATION
Standardization of carpet area calculation is the first and foremost benefit of RERA Act. This is because there was no standardized formula for calculating carpet area. As a result of which every builder used their own method of calculating and inflate the prices of properties thereby exploiting the buyers.
Note: Carpet Area meaning as defined under RERA Act
“Carpet area” means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.
Explanation.— For the purpose of this clause, the expression “exclusive balcony or verandah area” means the area of the balcony or verandah, as the case may be, which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee; and “exclusive open terrace area” means the area of open terrace which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee.
2.TRANSPARENCY IN REAL ESTATE PROJECTS
Before implementation of RERA act, real estate developers don’t disclose proper information like Project layout, deadline of project completion, utilization of amount received from the buyers. As a result of which there was no transparency in the functioning of real estate developers. Also, they tend to take undue advantage of the buyers money. All this has been eliminated with this act since now every real estate developers are required to register their projects under RERA Act and provide proper information to the buyers regarding the project.
3.RESTRICTION OF MAKING CHANGES BY THE REAL ESTATE DEVELOPER WITHOUT CONSENT
Under RERA Act, the promoters are required to take consent from atleast 2/3rd of allottees who have agreed to take apartments or plots in the real estate project before making any change in the sanctioned layout plans as approved by the authority. So this provision has restricted promoters from making unnecessary changes in the project layout.
4. ACCOUNTABILITY OF PROMOTERS FOR ANY STRUCTURAL DEFECTS FOR A CERTAIN PERIOD
Another benefit of RERA Act is that buyers have right to get structural or any other defect rectified by the promoter within 5 years from possession of the plot or apartment as the case may be without any additional charges. This rectification is required to be done by the promoters within 30 days of notice being given by the buyer. In case the said defect was not rectified within 30 days then the buyer is entitled to receive compensation for the same.
5. PROTECTION TO BUYERS IN CASE OF DELAY IN PROJECT DELIVERY
The buyers are entitled for full protection under RERA Act in case the promoters fails to deliver the project by due date due to any reason. They are being given two options- Either they can withdraw from the project and are entitled to get full refund by the promoter or they can continue with the project till they receive the possession and are entitled to get interest for every month of delay till they receive the possession.
6.PREVENTION FROM MISLEADING ADVERTISEMENT
Earlier the promoters don’t disclose accurate and reliable information in the advertisement or prospectus issued for selling plots or apartments. But with RERA implementation, promoters are bound to provide accurate disclosure of information about Registration number and Website address of the authority where details of the project are mentioned. This helps buyers in taking informed decision after receiving proper disclosure of information.
7.EFFECTIVE UTILIZATION OF BUYERS MONEY
Under RERA Act, the promoters are obligated to deposit 70% of the amount realized from allottees in a separate bank account and the same shall be used for the respective project only. Further the promoters shall withdraw these amounts in proportion to project completion percentage after getting it certified by an engineer, an architect and a chartered accountant in practice. This prevents misuse and diversion of funds which was earlier done by promoters.
8. ESTABLISHING MECHANISM FOR GRIEVANCE REDRESSAL
The buyers can raise a grievance to Real Estate Regulatory Authority in case of any default on the part of promoters or real estate agent. Further in case the person aggrieved from direction of the regulatory authority, it may make an appeal to the Appellate Tribunal for grievance redressal.
9.RESTRICTION ON ACCEPTING ADVANCE FROM BUYERS
RERA Act restricts the ceiling on acceptance of advance or application fee by promoters upto 10% of the cost of apartment, plot or building before entering into agreement for sale and registering the said agreement for sale.
10.OBLIGATIONS IN CASE OF TRANSFER OF PROJECT
Pursuant to RERA Act, the promoters can’t transfer the real estate project’s rights to third party without obtaining consent from 2/3rd allottees and approval from the Authority.
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