Buying a home is often considered a crucial part of financial investment in Indian families. However, the buyer’s journey is more than an emotional milestone. It is a lifelong dream and a symbol of stability for many households.
However, you may encounter various hiccups along the way to buying a home, such as hidden charges, misleading advertisements, project delays, and poor construction quality. All of these things in the past have significantly created stress and financial burden in the marketplace.
Therefore, the Government of India introduced the Real Estate (Regulation and Development) ACT in 2016, generally known as RERA. It has a fully-fledged body coming into effect on May 1, 2017, to transform the Indian Real estate by inculcating the values of fairness, accountability, and transparency.
What Is RERA?
The Real Estate (Regulation and Development) Act, 2016 (RERA), is intended to protect the rights and interests of buyers in relation to real estate transactions by providing a model of ethical and transparent conduct.
One of the key benefits of RERA is that every state and territory in India will have an authority to oversee the registration of projects. Under RERA, both commercial and residential development are subject to RERA’s rules and regulations.
In addition, RERA defines a project as any building or group of buildings constructed on or after RERA’s commencement date that meets the following criteria:
– The total area of the land on which the building(s) will be located is greater than 500 square meters; and
– The total number of apartments in the building(s) exceeds eight.
The signing of these mandatory RERA documents by the builder commits the builder to complete the project as advertised. RERA further requires that a builder has to market or sell a unit (s) before its completion; i.e., a builder is forbidden to market a unit until there is a guarantee that a unit will be available for sale.
How RERA Protects Homebuyers?
Once registered with RERA, homebuyers can track their project’s progress online, as well as receive legal protection if the project is not completed according to the developer’s promises.
Mandatory registration under RERA means that the following information about a project must be submitted to RERA by the builder at the time of registration:
1. Project layout(s).
2. Project completion date.
3. Land title status.
4. Financial projections.
Only registered projects can be legally advertised or sold. This drastically reduces the chances of fraudulent or unauthorized developments, ensuring that homebuyers can invest with confidence.
1. Publicly Available Information Through Transparency
In all states, RERA has an official website, where all registered projects have been published. Developers will upload the detailed and complete information required by RERA Regulations, which consists of:
1. Laying out and plotting out building elevations both “above” and “below” the ground floor level of each section of the project
2. Approval paperwork (licenses, etc.)
3. Physical stages of construction
4. When the project is scheduled to be completed
5. What kinds of buildings have been built previously by the promoter, and if there have been any problems associated with the promoter’s previous projects?
Home buyers can quickly verify online that all of the above have been submitted by each developer. Creating this level of transparency allows home buyers to compare similar projects, check if the developer’s claims match what is shown in the advertisement, and provides a method for consumers to avoid misleading advertising.
2. Project Timelines and Timely Delivery
For home buyers in India, project delays are one of the most frustrating issues. To address this issue, RERA provides that if a developer is unable to fulfill all of the delivery obligations on the agreed-upon time frame, the developer is required to pay a monetary penalty to the home buyer.
The penalties are generally based on a $1.00/day interest calculation for every day the project is delayed beyond the date that was scheduled for completion. As a result of these penalties, developers have a strong incentive to deliver projects on time, which has dramatically reduced the amount of project delays.
3. Limit on Advance Payment
RERA protects home buyers from having to pay a large amount of advance payment without having the means to back it with a legally valid purchase contract. Under RERA, a developer cannot collect more than 10% of the total property purchase price from the buyer as an advance payment before finalizing a formal purchase agreement.
This helps to ensure that the buyer is not over-equipped with too much debt when the project is initiated and eliminates the potential for developers to misuse the proceeds of advance payments.
4. Structural Defect Liability & Quality Assurance
Every home buyer expects a home that is safe, durable, and built with integrity. Developers are required by law under RERA to provide a structural warranty for 5 years for the property they are purchasing.
If a home buyer finds any structural defects or bad workmanship that exist within these 5 years, the developer or builder will have 30 days to repair the defect, at no cost to the home buyer. This gives home buyers a long-term assurance of quality and accountability from their developer or builder.
5. Fast and Fair Resolution of Complaints
The establishment of an independent dispute resolution system is one of the main benefits of RERA. When a home buyer is unable to resolve an issue, such as a breach of contract or false promises, and has experienced other issues, such as quality and possession delays or fraud. In such a situation, the home buyer can file a complaint with RERA. RERA requires that the RERA authority respond to and resolve complaints within 60 days.
Home buyers now have a fast and fair way to protect their rights as defined within RERA, which had been previously unavailable through the traditional court system.
Why is it important to verify RERA Registration Status?
Home Buyers need to ensure that they verify a project’s RERA registration status before making a financial and legal commitment. This will save them from a multitude of problems in the future.
To verify registration status:
1. Check your state RERA’s official web portal (i.e., UP, Karnataka, Maharashtra, etc.)
2. Inquire about your Builder’s Project by Name, Registration No. or Builder’s Name.
3. Look up the Project’s Approved Plans, Construction Status Updates, and Developer’s History, to determine the completion date of the project.
The RERA registration number will be prominently displayed on the advertisements, brochures, and banners of the builder. If the builder cannot or will not give this important information, take this as an indication of something to be concerned about.
Effects On How RERA Is Changing The Direction Of The Industry
Not only have RERA regulations empowered homebuyers, but they have also changed how developers behave and what homebuyers expect. Developers are required to have a strict financial discipline and maintain an escrow account to hold at least 70% of the money collected for a project until the project is complete.
This restriction on the ability of developers to divert funds from one project to another increases the likelihood that a project will be built without delays.
Additionally, all Real Estate Agents are required to register with RERA by ensuring a higher level of professionalism among Agents, reducing instances of misleading practices.
Easily Find RERA-Approved Properties!
RERA is not just a regulatory framework, but rather an extremely powerful protection for anyone buying a house in India, providing transparency, accountability, and consumer protection in order to ensure that buyers can realise their dream of home ownership through the foundation of trust and not uncertainty.
As such, for anyone planning to purchase a property, the very first step in their journey to home ownership should be verifying the RERA registration. A simple check of the state’s RERA website may save you years of emotional, financial, and legal headaches.
In an industry that is founded on trust, RERA is an essential guide for buyers and supports responsible development while bringing millions of people closer to realising their dream of owning their own home.
