Introduction
The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India that helps protect homebuyers and boost investment in the real estate industry. The Act establishes a Real Estate Regulatory Authority (RERA) in each state to regulate the real estate sector.
Table of Contents
- What is Real Estate Regulatory Authority (RERA) Act?
- What is RERA-Approval?
- Real Estate Regulatory Authority Act and Rules
- Benefits of Real Estate Regulatory Authority
It also acts as an arbitral institution for expeditious dispute resolution. The bill was passed by Rajya Sabha on March 10, 2016, and Lok Sabha on March 15. 61 out of 92 sections of the notified Act came into force on May 1, 2016. The rest of the provisions came into force on May 1, 2017. The Central and State Governments are obliged to notify the regulations under the Act within a statutory period of six months.
What is Real Estate Regulatory Authority (RERA) Act?
RERA (Real Estate Regulatory Authority) was introduced in 2016. The purpose of the RERA Act, 2016, is to protect homebuyers and increase investments in the real estate industry. The RERA law is implemented in all the states to regulate the real estate sector. The law facilitates fast and effective dispute resolution.
The RERA Act makes it mandatory to start any residential or commercial real estate project with an area of more than 500 square meters to register the project with RERA. Registration with RERA will help create transparency in the implementation of the initiated projects.
What is RERA-Approval?
RERA approval means simply registered in RERA. Approvals, land rights, insurance, etc. are the steps every builder has to follow to register their project.
Main Features of RERA:
- Safety
- Transparency
- Fairness
- Quality
- Authorization
Real Estate Regulatory Authority Act and Rules
According to Section 84 of the Real Estate Act, 2016, within six months from the date of its commencement, the State Governments shall frame rules to implement the provisions annexed to the Act.
- On October 31, 2016, the Centre, through the Ministry of HUPA (Housing & Urban Poverty Alleviation), released the General Rules of the Real Estate (Regulation and Development) Act, 2016.
Benefits of Real Estate Regulatory Authority
There are many benefits of getting registered under RERA for buyer, promoter and real estate agent.
- Standardization of carpet area: Before RERA, how a builder calculated the price of a project wasn’t defined. However, with RERA, there is now a standard formula that is used to calculate carpet area. This way, promoters cannot provide inflated carpet areas to increase prices.
- Reduced risk of bankruptcy for the builder: Many promoters and developers work on multiple projects simultaneously. Earlier, developers used to transfer funds from one project to another. However, under RERA, 70% of the collection money has to be deposited in a single bank account. Funds can be withdrawn only after certification by engineers, chartered Accountants, and architects.
- Advance payment: As per RERA norms, the builder cannot take more than 10% of the project cost as an advance or application fee from the buyer. This prevents the buyer from getting funds quickly and having to pay a large amount.
- Buyer’s Right to Question Defects: Within 5 years of possession, if there are any structural defects or quality issues, the builder must rectify these defects within 30 days at no cost to the buyer.
- Interest payable in case of default: Before RERA the interest payable to the buyer is very low if the buyer delays payments to the promoter. This changed with RERA. Both parties have to pay the same amount of interest.
Conclusion
RERA has introduced a standard formula for calculating carpet area, preventing promoters from raising prices. It stipulates that 70% of funds collected from buyers should be deposited in a single account. This reduces the risk of bankruptcy of builders. For more information, visit Openplot.
Also read: Uttar Pradesh RERA: New Norms for Investigation of Project Documents