RERA has been implemented with a prime agenda to ensure that the sales of properties are in an efficient and transparent manner. Ultimately defending the interest of consumers, RERA has established a mechanism for every category and department of the sector. The builders are the base of the real estate sector as they bridge the gap between the construction ability and the buyers need. RERA which ushers in transparency, accountability and efficiency in the sector, has impacted developers in many ways. While we wish that the buyer should not experience delays, of any nature, the developers have to fall in line by sharing all information as required by the authority. The information should then accessible online and finally, a robust feedback mechanism has to be designed between the authority, the promoter and the buyer. Also Read:- RERA Impact on Real Estate Real Estate Broker
In this article we bring to you the highlights of the RERA impact on promoters/builders:
- The builder will have to buy land, get all the necessary approvals and then only they can declare the launch of the project. The builders will have to get all the necessary clearances before they can selling the project. The cost of the project for the developer will increase as now sales will start post-registration, so no pre-launches!
- For all the ongoing projects the promoters have a deadline of 31st July, 2017 to get their ongoing projects registered with RERA.
- The booking procedure will be completely revised under RERA. Crucial information like the stage wise time schedule of completion of the project (including every provision like water, sanitation, etc.) will have to be shared with the buyer. In fact, at the time of booking itself, the promoter will have to issue the allotment letter which contains all the above stated information.
- Every advertising collateral will have to carry the registration number of the project. The registration number will be obtained only after the project gets registered. For all kinds of advertising or promotion, the details like the developer’s background, projects launched by the developer in the past five years, the status of the ongoing project has to be shared.
- The promoter should also have the list of approvals and commencement certificate from the competent authority, failing which advertisement and sales related activities will be suspended. They would need all these documents while presenting the project to the customer.
- In case of any structural defect (like a quality compromise) or provision of promised services or any other obligations from the promoters end as per the agreement for sale, if brought to the notice within a period of five years, it shall be the duty of the promoter to rectify such defects without further charge, within 30 days.
- The promoter is also liable to return the total amount with interest at the rate as mentioned in the agreement for sale if it fails to complete or is unable to give possession of the property within the agreed time-period.
- In case the buyer does not intend to withdraw from the project, he/she will be paid, by the promoter along with the interest for every month of delay, till the handing over of the possession.
- Now, as per RERA, a promoter cannot accept more than 10 percent of the cost of the property, even as an advance payment, without first entering into a registered agreement for sale.
- 70% of the payment received has to be directly deposited in an separate account and money from it can be withdrawn stage-wise only for that particular project.
- The promoter has to clearly disclose to the buyer the carpet area of the flat/unit being sold and has to state the date at which the project will be completed. In case of any delay in the same, the promoter is liable to pay the rate of interest in case of any default.
- In case the builder doesn’t adhere to the RERA regulations, he will not only lose on the registration of the project, but can also face imprisonment for up to 3 years.
With RERA, the competition among the builder will increase, as only strong players will be left in the market. The builders will have challenges when it will come to cash flows. RERA will ensure that only registered projects and promoters become the face of any real estate project. Till now, there weren't any regulator and neither were the rules of the game in place. In the absence of a regulator, the home buyer was literally at the mercy of the builder, which no longer will be the case!