Real Estate Regulatory Act (RERA), 2016
The Real Estate (Regulation and Development) Bill was passed in the Indian Parliament earlier this year. It is set to being about major changes in terms of bringing in more transparency in the real estate sector, giving clarity (in terms of procedures) to both developers and buyers. The RERA Bill will also help protect buyers from fraudulent practices.
What are the main reform measures of RERA?
Establish State Real Estate Regulatory Authority
This bill will establish State Real Estate Authorities in every state. This regulatory body will act as a redressal cell, where buyers can register their complaints against developers. The State Real Estate Regulatory Body will oversee the transactions of both commercial and residential projects. The authority will also categorise the projects of different developers, helping customers in their decision making.
On-time completion and handing over
Because of delayed construction, projects cannot be completed and handed over to buyers on time. According to this Act, 70 per cent of the money collected from the buyers has to be kept in an exclusive bank account, with the money, to be used solely for construction purposes of that particular project. This will prevent builders from rolling the money set aside for a particular project for other purposes, or for the construction of other projects.
According to this Act, it is mandatory for builders to publish all the information about their project, such as project plan, project layout, land title and status, government approvals, contractors, schedule and completion of the project with clients and RERA. The law now makes it illegal to sell projects with vague details. Specifications such as carpet area have to be clearly mentioned before sale.
Currently, builders do not suffer if a project is delayed. However, the new law states clearly that if a project is not delivered on-time, it will make builders liable to pay the client, the exact amount the client pays as monthly interest on his/her housing loan. If the builder violates the Order of Appellate Tribunal of RERA, the builder is liable to be granted a jail term of up to 3 years with or without fine.
Mandatory after sales services
If the client finds any structural deficiency in the project, then he/she can contact the builder’s after sales services within a year of possession. The builder cannot make any change to the plan without the written consent of the client.