The Indian Parliament has passed the Real Estate Regulator Bill which is expected to streamline the real-estate sector and bring in greater transparency and accountability.
This is an extremely wonderful piece of news for home buyers who often have to deal with delays, corruption, and bureaucracy when purchasing a home, flat or apartment.
These are the 5 important ways in which the act will improve the real estate sector and make things easier for new house buyers:
State-level regulatory authority to handle grievances
The RERA will lead to the creation of a state-level regulatory body called the State Real Estate Regulatory Authority. This body will be the go-to authority for all home buyers with concerns and grievances (fraud, refund, different charges like maintenance charges, registry and agreement) related issues to a builder or construction company.
This regulatory authority will also be the sole authority governing all commercial and residential real-estate transactions in that state. The creation of this regulator, however, will happen after all the states in the country ratify the RERA Act and appoint their regulatory authorities.
Ensuring greater transparency by builders
Home buyers will have now have access to every information they need about a construction project at their fingertips. This is because the RERA makes it compulsory for builders to submit the status of the land title,copies of regulatory approvals, project layout, details of contractors and sub-contractors working on the project and also the expected completion schedule to the state authority.
As a result, prospective homebuyers do not need to depend on developers solely and can cross-check information about a project online.
Moreover, the law mandates that every project that measures more than 500 sq. mts. or consists of over 8 apartments will have to be registered by the developer with the state authority.
Abolishing scams like built-up and super built-up area
Property developers had developed all kinds of jargon such as carpet area, built-up area and even super built-up area (in square feet or square meter) to make things confusing for home buyers.
As a result, a lot of people purchasing homes would sometimes get a much less area than what they’d paid for. Thanks to the RERA, all of this has been made illegal. From now on, the definition of carpet area is clearly specified in the law and home buyers will pay only for that.
Deposit to be paid by developers for ensuring project completion
Often, developers go on a purchasing spree and start multiple projects at a time which they are unable to finish later. Several times, this happens because the builder or the developer claims a cash crunch in the middle of a project.
Due to this, a lot of home owners who have already paid a deposit or down-payment for their property get stuck as the project gets delayed or stalled.
The RERA introduces a new provision which requires developers to lock-in 70% of the estimated cost of a project by depositing it into a dedicated escrow bank account. This will ensure that developers stay disciplined and park aside adequate funds to ensure timely completion of construction projects.
Greater protection for home buyers
Incomplete projects are the biggest worry of every home buyer. The RERA has introduced an important provision to prevent that. According to the new law, the developer has to commit a completion date to the buyer.
If there are any delays beyond this date in handing over possession of property, the developer will have to pay an interest to the buyer which will be commensurate with the interest rate that the buyer is paying on his/her home loan.
Moreover, the law also ensures that a builder cannot make any changes to their sold property plans during construction without the permission of the home buyer.
The RERA has made it convenient for home buyers to get their grievances against a developer resolved faster by empowering the state regulatory authority. Along with that, there will be appellate tribunals set up under RERA for resolving any disputes between buyers and builders.
The law provides that any property developer or builder who violates the order of the tribunal can be imprisoned for up to 3 years.
Also the protection provided by the RERA does not end after you purchase a home. Under the new law, a buyer can contact the property builder or developer within a year in writing to demand any compensation or after-sales service if the construction is unsatisfactory.
The new Real Estate Regulator Act is a boon for new home buyers in several ways. As more Indians purchase property, there was a need for a law which would ensure transparency and a regulatory mechanism in the real-estate industry. Thankfully, this new law ensures that by bringing in accountability and by protecting the rights of home buyers.
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