RERA or Real Estate Regulatory Act was the need of the hour for the Indian real estate market. Inspite of being one of the largest industries, it had no set rules or guidelines. All this changed when the RERA bill was passed in the Rajya Sabha on 10 March 2016 and the Lok Sabha on 15 March 2016.
RERA Notified: Real Estate Industry Welcomes Transparency
In layman’s terms the bill largely seeks to protect the interest of the allotees/buyers by promoting transparency, accountability and efficiency in the real estate sector. The state governments were given a time frame of 6 months to notify the act at their level. With the State Govt. of Gujarat , Uttar Pradesh and five Union territories of Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh notifying RERA and the others following suit, this brings much cheer and a sense of relief to the real estate community, be it builders or buyers.
Let us take a closer look at major amendments made to the bill and how it affects the homebuyers and other market players.
1- The Real Estate bills calls for a regulatory authority to be established at state (or Union Territories) levels to regulate the real estate transactions in the area. This will instill greater transparency in the sector and investments will become more structured. Once this happens, the foreign investment in the sector would also rise.
2- Under the new provisions, all the real estate projects and also the agents will have to be registered with the regulatory authority of the respective state. Developers will have to disclose the details of their project including the approvals from other government authorities, status of the land on which the project will be developed, layout plans, etc.
3- The developers will have to deposit 70 percent of their project cost in an escrow account. This is to make sure that they do not consolidate and utilize their funds from different projects; funds from one project should be utilized to develop the same and none else. It will also ensure timely construction of the project.
4- Developers and promoters will have to disclose important information about their projects to the buyers. Any change in the project design and layout will not be allowed without the consent of the buyers.
5- As per the amendments, properties with sizes greater than 500 sq mt (or 8 flats) will fall under the scope of the law, as opposed to 1000 sq mt (or 12 flats) which was the criteria earlier.
6- The local authorities that provide certain approvals to the developers will also be under the ambit of the law. This is to protect the developers’ interests. Many a times they fail to meet the deadlines due to a delay in receiving necessary approval from the authorities. But now they have a legal recourse for the same.
7- Homebuyers have the right to approach consumer courts in case of any disputes or discrepancies. 644 district level consumer courts will be set up.
8- The bill also mentions penalties and punishments for the violation of the provisions of the bill. If the builders violate it, they may be imprisoned for three years. If the buyers or agents do, they will be imprisoned for one year.
9- A fast track dispute resolution mechanism will be established for quick resolution of disputes among different parties via Appellate Tribunal and adjucating officers.
10- All the above provisions will be applicable for residential as well as commercial real estate