- Friday 13th May 2022
- Author: Neha Singh
RERA aims to create a more productive and efficient system to ensure complete transparency, thereby, making the functioning of real estate free from any loopholes and drawbacks
As per the RERA Act, developers are not allowed or permitted to take up the fund assigned to the previous project account and use that money in a new project
RERA Act is an attempt to regulate the real estate sector and make it more organized and thus highly productive
The real estate sector is one of the most promising sectors in India. From enhancing the infrastructure of the nation, the real estate sector is also a major employment generator. Despite being one of the oldest sectors, it remains highly unorganized. There are several apprehensions surrounding this segment, and hence there has always been a need for regulation. The Indian parliament passed the Act in 2016. RERA was introduced with the intent to create a regulatory authority that can protects the rights of buyers.
Why was RERA introduced?
As mentioned above, there has always been an underlying need for regulation in the real estate sector. This will make this business get more productive and profitable while creating complete transparency in the entire transaction process. The land auction has become a key issue. There have been precedence where the real estate developers often end up selling their projects to investors without approval or with bad-quality construction. With the intervention of RERA, we can address all these issues. Some of the key points that RERA will be addressing are:
- Delay in possession
- Quality of construction
- Price of the project
- Helps in establishing trust in the system
- Establishing an adjunction mechanism for faster dispute redressal
- Establishing a bond of trust between the buyer and seller.
- The Act was introduced to safeguard the right and interests of the buyer.
So, putting it in simple words, RERA aims to create a more productive and efficient system to ensure complete transparency, thereby, making the functioning of real estate free from any loopholes and drawbacks.
Are there in any limitations to RERA?
From the above discussion, we can conclude that RERA is a positive move in the real estate sector. However, we cannot completely ignore the fact that there are certain limitations to this Act. The following section highlights some of the key disadvantages of RERA, particularly for developers:
- As per the RERA Act, developers are not allowed or permitted to use the funds of the project with a new project. In simple words, you cannot take up the fund assigned to the previous project account and use that money in a new project.
- To regulate the entire system, you would need approval and permission. This eventually increases the time and also impacts the productivity of the sector.
- The stringent regulations in the real estate sector have pushed many real estate developers away. The regulation requires approvals and permissions, which may result in a delay in starting/finishing projects.
- The real estate sector also includes the use of construction materials. These materials are a source of earning for several other associated sectors. With the lack of interest of real estate developer due to the stringent policies, there can be a considerable downfall in the demand of such construction materials, this eventually impacts the employment and productivity of the sector.
These are some of the key aspects associated with the RERA Act. Although there are certain limitations of this Act, its positives overshadow the negative aspects. RERA Act is an attempt to regulate the real estate sector and make it more organized and thus highly productive.
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