Ten RERA points a buyer must know

The Real Estate (Regulation and Development) Act or RERA will change the landscape of the real estate sector of India. The initiative aims to empower the consumer through transparency and accountability. The Act will protect the buyers from unscrupulous developers and allow only authentic players in the market. The law is a landmark decision in the real estate sector of India that has been under construction for the past nine years. The Act first came to force on 1st May 2016, with 59 of its 92 sections notified. The rest of the sections were notified on the 1st of May 2017.

Below are a few changes that will be evident in the real estate sector due to the passing of the act:

Registration

The process starts with the registration of a developer. The registration process is mandatory for all properties above 500 square meters or properties with eight apartments and over. Thus, the properties whether residential or commercial, under construction or even those awaiting certificate of completion will now have to be registered. Failing to register will attract a fine of up to 10% of the project cost and repeat offences can even land one in Jail.

Approval of the project

The project of the developer once approved cannot be altered without consent. This means that what the buyers will see and pay for, is what they will eventually get. This will eliminate the fear of unwanted surprises for the buyer. Any changes to the proposed plan can only be implemented after the written consent of the buyer. The developer additionally cannot increase the cost of the properties of the project.

Construction project

Every phase of the construction will hereafter be treated as a separate project. Every phase of the apartment will be considered as a standalone project. Therefore, separate registration will be needed for each phase of the project. This will be especially beneficial for those who release the payment of the project in tranches. This will also ensure the buyer that the developer has all the papers in order, required for the project.

Depositing money

The new law also states that the money collected from the buyer will be used by the developer in the same project. To ensure that, 70% of the money collected from the buyers of a project will be deposited in a separate escrow account. This will keep the developers who divert the money of one project to advertise another project in check. The deposit of money in the bank through cheques will also address the problem of black money in the country.

Delay in the project

The law works towards ensuring that the projects are completed on time by the developer. Any delays in the completion of the property will be dealt with strictly. The developer will be held responsible. He will be subjected to fines and will have to pay interest on the amount paid by the buyer. The rate will be 2 percentage points above the current SBI’s marginal cost of funds. This will strip the developer of the nonchalant attitude that was the norm of the realty sector earlier.

Super built-up area will be illegal

The saleable area of the properties, will be the more transparent and more efficient carpet area. The properties henceforth will not be promoted using the super built-up. The super built-up area in the past was a concern among the buyers. It was more than often misleading and the information given to the buyer was shady. Under the new law, promoting or advertising a property using its super built-up will be illegal and a punishable offence.

Real Estate Regulatory Authority:

The State governments will respond to the Centre’s guidelines by setting up a Real Estate Regulatory Authority. This will be a point of contact for the buyers of the property, to report any problems. The body will work towards the redressal of their grievances in an expedited manner. They will be required to dispose of the complaints within 60 days of their receipt. The appellate tribunals will now be required to adjudicate cases in 60 days instead of the earlier 90 days.

Penalty for the developer:

The buyer can come forward with any shortcoming from the proposed plan of the property within one year of taking possession. The problem will then be taken care by the developer of the project. If the developer refuses to respond or violates the order of the appellate tribunal of RERA,the law has a maximum jail term of up to 3 years with or without a fine for such offenses.