Real Estate (Regulation and Development) Act,RERA 2016 which came into effect on May 1st in all the states and union territories aimed at bringing better transparency in the real estate sector. M Venkaiah Naidu Housing and Urban Poverty Alleviation Minister, said that the law will make “buyer the king” and developers will also benefit from the “increased buyers’ confidence in the regulated environment”. “The builders must fulfill their promises and simply adhere to the commitment made in the advertisement”.
Housing Ministry last year notified the rules for 5 Union Territories – Chandigarh, Lakshadweep, Dadra and Nagar Haveli, Andaman and Nicobar Islands and Daman and Diu, while Urban Development Ministry came out with such rules for the Delhi-NCR.
The RERA can help home buyers to select a project wisely. Here are few points that may help the buyers:
The builders will now have to get the ongoing projects that haven’t received completion certificate and new projects registered with RERA regulatory authorities. This will save the home buyers from getting cheated by fraudulent builders.
Besides the mandatory registration of projects and real estate agents, few other provisions include depositing 70 % of the funds collected from the buyers in a separate bank account for the construction of project. It will assure that the funds are utilised by the developers for construction purposes only.
The RERA, aims to make “buyer the king”, it will ensure that there are no pending projects that can harass buyers.
The RERA also plays important function of acting upon complaints against the promoters, and this protection for consumers can also be weakened in case of any delay in setting up the RERA, says the rating agency ICRA.
If the RERA does not reject the application for registration within 30 days, the project would be deemed to be registered.
Rights and obligations of buyers, developers and real estate agents are clearly defined in the Act and any aggrieved party can seek redressal for violation of the terms of agreement by the other party.
In case of project delays, the onus of paying the monthly interest on bank loans taken for under-construction flats will lie on developers unlike earlier, when the burden fell on home buyers, said real estate service provider JLL India CEO and Country Head Ramesh Nair.
Industry bodies CREDAI and NAREDCO said the implementation of this law will bring paradigm change in the way Indian real estate functions. They expect property demand to rise but supply may get affected in the near term.