How will RERA change the Indian Real Estate Industry

RERA or the Real Estate (Regulation and Development) Act, 2016 passed in March 2016 in the Indian parliament is the law which attempts to streamline the Indian Real Estate Industry. This Act has been implemented throughout the nation from May 1st 2017. RERA, also a government body with the namesake of its governing law, will deal with the regulation, execution and functioning required in channelizing the builders, buyers and real estate agents of the industry, encouraging them to indulge only in fair practices and contribute in the wholesome development of the country.

How will RERA change the Indian Real Estate Industry

How will RERA change the Indian Real Estate Industry

RERA has been hailed as a buyer-friendly law, one which will bring accountability, reliability and transparency to the real estate industry of our country. The Minister of Housing and Urban Poverty Alleviation has also affirmed that it is one of the most consumer friendly laws and that states have no power to dilute its provisions. He also has said that the law will make “buyer the king”.

With RERA, the below listed changes are expected to occur in the Indian Real Estate Industry:

  1. Developers will have to register any future projects which come under RERA norms with the authority. Projects which are on-going (i.e. have not received ‘Completion certificate in specified time’) shall also have to be registered within 3 months of May 1st 2017. This step stretches the scope of real estate property regulation in India by unmatched standards.

  2. Under the law, definition of Carpet Area, which is the Net Usable Area, has to be clearly defined while selling. This means that now transparent and defined transactions will take place.

  3. The entire nation comes under RERA umbrella as it is mandatory for all states to establish a State RERA. RERA for Union Territories has already been established.

  4. Formation of Resident Welfare Association (RWA) will now be mandatory within three months of possession. This fulfils the obligatory need of a platform for buyers.

  5. Residential and Commercial projects on over 500 square meters of land or with eight flats will have to be registered. This increases the ambit of property regulation in the country.

  6. An under-construction project which comes under RERA’s purview can’t be advertised by developers unless the same is registered with the authorities. This will clear out dishonest developers.

  7. Apart from the Appellate Authority, Buyers can now also go to Consumer Courts. Moreover, Builders are also responsible for any structural defects until five years from the date of handing over of possession. Also the buyer can demand after-sales service for 1 year of taking possession from builder in written in case of any deficiency in the project is noticed. This fixes accountability of one and all and provides a podium to listen to the concerns of people involved.

  8. Builders will have to deposit 70% of the sale proceeds, including land cost, in an escrow account (separate bank account) for construction of the project and pay interest to buyers on defaults/delays as per prescribed standards. In case of violation of appellate and regulatory rules, imprisonment is also possible.

  9. Since developers will have to make public a lot of the technical and financial information of the project through a website, transparency will go up a notch after RERA.

  10. Altering of the site plans of their sold properties by developers is now possible only after the consent of buyers. This will prevent unscrupulous tampering of the site by the developer.

  11. Developers may shift focus on completing their under-construction projects as per the promised timeline rather than launching new ones.

  12. The Raising and Deployment of Capital used for developing the projects shall be regularized.

  13. Also, arranging Insurance of a land title, even of a land title which is held invalid, is now possible.

  14. As trust in and comprehension of the realty industry rise after RERA law, so will the buyer tendency to invest in real estate.

RERA is exemplary in the sense that it is set to benefit one and all and aimed at encouraging the right kind of development in the country. It will benefit the developers, builders and agents by ushering in an era of trust and transparency by weeding out unscrupulous people and their businesses from the realty industry and it will surely profit the buyer who will now have a lot of readily available information on builders, their projects and their reputation and capabilities and thus decision making for them will be a lot easier.

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