In India real estate is getting bigger business and legal issues are also arising. With the prevailing discrepancies and issues in India’s real estate sector, the government in 2016 took a concrete step. The parliament passed the RERA Real Estate (Regulation & Development) Act, 2017. This Act is enacted to ensure efficiency and transparency in the real estate sector and provide a speedy redressal mechanism for protection of the interest of consumers in the real estate sector.
This authority works as special tribunal to bring about transparency and fairness in the working of the real estate sector. There are three forums covered under RERA Act as- RERA Authority, RERA Adjudicating Officer, RERA Appellate Tribunal. India is sure to have a rationalized real estate sector with a smooth workflow if RERA is implemented accurately.
The Real Estate (Regulation and Development) Act, 2016
This Act is the most significant act for regulation and promotion of the real estate sector. It facilitates the development, sales activity of real estate projects, safeguard the interests of consumers, and amplify investments.
On March 10, 2016, the Rajya Sabha passed the RERA bill, followed by the Lok Sabha on March 15, 2016, and it came into force from May 1, 2016, where 59 of its 92 sections were notified, and from May 1, 2017, the remaining provisions came into force. These are three tiers of laws and regulations that apply to this sector namely, Union territory laws, state laws and municipal laws. Specific laws as per the requirement of a particular state or area are necessary as India is a vast country.
- Ensuring Translucency in the real estate sector
- Establishing an adjudicating mechanism for speedy dispute redressal.
- Protecting the interest of buyers/allottees in the real estate sector.
- Establishing a bridge of trust between buyers and the promoters
“One of RERA’s primary purposes is to address real estate consumers’ grievances. As such, the fact that the RERA authorities of various states and UTs have resolved over 65,539 consumer complaints in the last four years is noteworthy,”Anuj Puri, Chairman – ANAROCK Property Consultants.
Provisions of RERA Act, 2017
- Mandatory to register with the Real Estate Regulatory Authority (RERA): All commercial and residential real estate projects with over 500 square meters or eight apartments shall register with the Real Estate Regulatory Authority (RERA) for launching a project, in order to provide greater transparency in project-marketing and execution. For on-going projects, which have not received completion certificate on the date of commencement of the Act, will have to seek registration.
2. Escrow Account: The Act sets out a process for real estate transactions in which the maintenance of a separate bank account for each project is compulsory, of which only 30% of the total may be appropriated. The remaining 70% will only be used for the same project.
3. Clear Clauses: A major benefit for consumers included in the Act is that builders will have to quote prices based on carpet area and not super built-up area. The carpet area has been clearly defined in the Act to include usable spaces like kitchen and toilets.
4. Real Estate Regulatory Authorities: Real Estate Regulatory Authorities (RERA) shall regulate transactions related to both residential and commercial projects and ensure their timely completion and handover. Appellate Tribunal shall adjudicate cases in 60 days as against the earlier provision of 90 days and Regulatory Authorities to dispose off complaints in 60 days.
5. Standard Agreement: Guidelines are being framed to have standard agreement by the builder with similar clauses so that the buyers are not cheated with clauses against them. The Act clearly defines the right, responsibility and functions of all parties to the project.
6. Provision for damages for non-completion: The provision for jail term for a developer who violates the order of the appellate tribunal of the RERA is three years with or without a fine. However, even the consumer courts are taking strong action against builders where interest rate between 10.9% to 18% is answered against builder for his delay and other deficiencies.
7. RERA promises an array of rights to protect the buyers from the malpractices in the real estate space in case of False Promises, Defect After Possession, Defect in Title, and Right to information
8. No sale or advertisement is permitted without prior registration with the authority concerned. Provision of mandatory disclosure of all project details should be published on a single website for real estate projects.
Under the act, every state has a Real Estate Regulatory Authority holding power to address buyer grievances. These include all the concerns related to agents, builders, developers, etc. If you are not satisfied with the decision, you can further appeal to the Appellate Tribunal within 60 days.
Market situation after four years of RERA
- There have been fewer project launches and the focus has been on execution.
- Developers have tried to adhere to compliances, to avoid litigation.
- Relaxed delivery timelines for existing projects has granted developers an escape window.
The developers, nevertheless, feel that the RERA has changed the market dynamics, in a short period. Not just the buyers, but RERA is a win-win for all stakeholders, including developers, agents, and the industry on the whole.
The Indian Real Estate Sector is anticipated to become a $1 trillion industry by 2030 making it the third largest globally and Mumbai is without a doubt the hub of the Indian Real Estate Sector.
Land being a finite resource compared to the limitless demand of real estate, RERA and the subsequently established Authority would play a crucial role in the future. The Act ensures that homebuyers do not fall prey to delays or fraudulent activities by builders and promotes to smooth the funds to eliminate interruptions. With RERA execution on the rise, infusion of financial discipline and security of homebuyers is guaranteed, ensuring sustainable development of the real estate sector.
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid in full and managed with reasonable care, it is the safest investment in the world”-Franklin D. Roosevelt
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