The RajyaSabha passed the Real Estate Regulatory Authority bill on the 10th of March 2016 and the other provisions of it came into force from 1st May 2017. Under the Act, the central government empowered the state governments to notify their own rules six months after the Act was passed and issue model rules to be framed under the central Act. The RERA has imposed regulatory laws and regulations on the real estate sector and the promoters bringing protection to the ordinary consumers.
Why was RERA necessary?
The Real Estate Regulatory Act (RERA) was deemed necessary as the home buyers had long-standing complains that the real estate transactions were heavily skewed in the favor of the promoters and developers. The sector was also marked with fraudulent activities of the real estate developers from which the end users needed a protection. It is hoped that RERA would bring more accountability and transparency provided the states do not tend to dilute the spirit of the Act to protect the consumer. Under the act, it is mandatory for each of the states and union territories to form its own regulator and frame necessary rules accordingly to facilitate the functioning of the regulator. The main objective of RERA remains to be protecting the end user and make every real estate transaction safer by inculcating in more transparency and accountability.
The benefits to the home buyers
Enactment of RERA has rendered due protection to the common consumers and the end users of the real estate sector. It has laid few restriction and bindings on the developer or the builder which would restrain them from fraudulent activities and would protect the common user. The main regulations to be followed by the real estate developers which protect the common end users are:
- Details of projects, land status, layout plan, approvals and completion schedules should be mandatory uploaded on the website.
- 70% of the payments or advances collected from the buyers should be maintained in a separate bank account and should be only used for the construction of the said project.
- For delayed possession, the developer would be imposed an interest penalty.
- The sale of properties would be on the basis of carpet area of the apartments.
- There is a warranty clause of five years which the developer has to bear with.
- Any grievance or any complaint should be resolved by the state’s real estate regulatory authority.
- The projects can be launched by the developers only upon receiving the approvals from the relevant authorities. The approvals so obtained should be put on the RERA website.
- Projects not registered with RERA cannot be offered for sale by developers or booked by the customers.
RERA doesn’t only propose to regulate the behavior of the real estate developers but the agents and the brokers too. Agents and brokers who are a long-standing part of the realty sector remained hitherto unregulated and unmonitored. The end user depends on them and considering this point the RERA attempts to put regulatory acts on the agents and the brokers too. The aim of RERA is to bring transparency and accountability in the whole gamut of functions and transactions of the realty sector.
Under the new regulations of RERA, the brokers and the agents would now need to maintain records of customers and show their registration number as a proof of their authenticity to customers. Undoubtedly the property agents and brokers registered under RERA would build more credibility and bring in added transparency to the sector. Further, a redressal body would protect the consumers’ interests in the long run and the mechanism set under RERA would treat the end users in a methodical and transparent manner as the purchasers would also be able to track their transactions through a real estate agent. The registration numbers of the brokers and real estate agents under RERA should be carried on all the documents and advertisements as well. The brokers need to obtain a license from the state government and this will certainly bring added transparency, accountability and authenticity on all the transactions.
RERA seems to usher in a new buyer-seller ecosystem which includes the developers, agents and the buyers with the government representatives on the other hand. Reinforcement of RERA will certainly go a long way in building a buyer-friendly real estate sector. The consumers would also get due protection along with speedy redressal of their grievances. As there would be more organization in the sector with improved buyers’ sentiments the prices would correct with the free interplay of the market forces and in the long run, the hazard hitherto faced by the sector can be expected to be under control.