With RERA, the government promised a stringent legislation and a lot of states have made it very clear that they have good intentions for the buyer. A long wait for your dream home will be a thing of the past now. All the frauds that used to happen to the customer and delay in possession from the developers side wont be a case anymore. As per the industry statistics, every year almost 10, 00,000 people buy flats which have a total investment value of around Rs. 13,00,800 crores and we have more than 76,000 companies working in this sector. Construction is the second largest sector in Indian after agriculture, with a contribution of 9% in the countrys GDP. More than 250 sectors are further connected with it and there are more than 17,000 current projects running in the country. The home buyer was not only paying his rent, but also the EMI for the new home. Before RERA they were helpless, and moving back and forth between builder or the court or the media, but had no one that could be of real help. RERA has changed this state for the customer. Mr. Venkaiah Naidu, Minister of Housing and Urban Poverty Alleviation, once very beautifully quoted, “In real estate, customer should be a king and developer should be a queen and they both should walk hand in hand.”
RERA is like a full package for home buyers. Let’s explore how:
Post RERA (A checklist for the buyer):
- No new housing project can be launched/advertised without RERA registration. It is recommended that buyers should not even buy from builders where RERA registration status is APPLIED FOR. Any project over 500 square meters is required to be registered with RERA.
- The builder by law has to register the project with RERA before 31st July, 2017. So even if you have already invested in a property that does not have a completion certificate, the builder has to get that project registered with the state RERA. As a buyer, you must track whether the builder has applied for the registration or not. In case the builder does not get the RERA registration number by July end, it means that all the compliances from his end are not in place or there are approval issues! In such cases the buyer must raise a red flag to the RERA regulator of the state. When the builder gets a show cause notice by the regulator, he will have to explain to the authority that why is the project unregistered and as a buyer you will also get your answers.
- The builders have to clearly disclose to the buyer the carpet area of the flat/unit being sold. Also, the builder cant charge for the super built-up area.
- In case of delay in the projects, the buyers can register an online complaint to the regulator and the builder will be summoned and held accountable for the delays. He will also have to give the new project delivery date and compensation. Also, regulatory bodies and appellate tribunals have to solve the builder-buyer disputes within 120 days.
- Compensation rates will no longer be one sided. The builder will have to pay the market linked interest rates for delays.
- The builder will have to take care of the structural defect in the building for five years from the date of handing.
- 70 per cent money received from home buyers directly have to be deposited into an escrow account. The money can be withdrawn as per the stages of construction and cannot be used in any other project.
- The projects design cannot be changed without a buyers consent. The developer must have the consent of at least 2/3rd of the buyers of a project before making any structural change.
- Many states have diluted the rules for RERA provision for the on-going and stuck projects. So if the money has already been siphoned off the project account, other than imposing heavy penalty or imprisonment on the builder, RERA may not be able to do much.
- Every regulator will be appointed by the State. What if in the worst case scenario, the regulator favours the developer and not the customer (under various circumstances)
- The bill is applicable only to plots/properties beyond 500 square meters. What about the rules for projects in places like Mumbai, where builders sell a lot of properties below this area!
- The law doesn't define structural defect clearly, which may lead to disputes between builders and home buyers.
RERA is called a REGULATION and not STRANGULATION. It is a clear indicator to the builders that from now on they will be watched. So while it can take up to 3 months for the basic infrastructure like a state regulatory website or regulator to be in place, but the customer should know their rights and buy only RERA registered projects starting today!