The Real Estate (Regulation and Development) Act, 2016 (RERA) is believed to be a game changer for the realty sector. It is a consumer-centric piece of legislation which has far-reaching implications for the industry. Over the years buyers have had many grievances against the realtors. This Act promises to address these concerns and do much more to ensure that the buyers’ best interests are always safeguarded.
Here are 7 ways in which homebuyers will benefit for RERA, which is expected to come into force from May 1:
1. No more delays
Project delays are one of the biggest problems plaguing the sector currently. Delays faced by buyers when it comes to getting possession of property have slowly eroded the trust factor between them and the builders. But RERA will put a stop to this problem. “In the pre-RERA era, developers could get away scot-free with delays in giving possession, that stretched for many years. However, through RERA heavy penalties will be imposed on the builders who delay their projects. They will have to pay the same interest as the EMI paid by the consumers,” says Ganesh Vasudevan, CEO, Indiaproperty.com.
You may also watch:
2. Fund diversion
Diverting funds meant for one project to another project has been a practice which has put buyers in unpleasant situations. Some developers pump the money they have received for one project into launching another project. This is a vicious cycle with nothing good coming out of it. Many projects have been delayed because of this malpractice. RERA will ensure that this practice is eradicated. Builders will now have to create a project-specific bank account and have to deposit 70% of the money collected from the buyers into that account. This is meant to ensure that buyers will get their homes on time.
3. Unwanted surprises
Often buyers complain that builders initially promise them a whole bunch of things which don’t necessarily translate into reality as the project progresses. At the end of it, buyers feel like they have been taken for a ride. “Under RERA this practice will be completely done away with. The builder cannot make any changes to a project which has been purchased by the buyer without getting written consent from the buyer. This way the buyer won’t be in for a rude shock when he finally gets his home,” informs Vasudevan.
4. Transparency and accountability
The real estate sector has had the distinction of having a notorious reputation among buyers. This is not without reason. There are many strikes against the sector, the biggest of which are a lack of transparency and accountability. Buyers are very wary when it comes to investing their money into a sector where there is no telling what will happen to it. RERA will go a long way in restoring buyer confidence in the real estate sector. Thanks to RERA, buyers will know exactly what will happen with the project they have bought into and heave a sigh of relief. This is a big boon for them and the realtors.
You may also watch:
5. Better governance
Governance has always been an issue with the real estate sector. With RERA this problem will become a thing of the past. It will give buyers a form of grievance redressal which they did not have access to before. “Under RERA it is compulsory for every state to create a Real Estate Regulatory Authority. Buyers can approach this body to settle disputes with developers. Developers must register their project with this body if their project is over 500 square meters in size or has eight apartments. Failure to do so will attract a fine of 10% of the project cost and the builder could face jail time if he repeats the offence,” says Vasudevan.
6. Specifying Carpet Area
Many home buyers are unaware of the concept of carpet area as many developers sell homes based on built-in area. “With the implementation of the Act, developers will have to clearly mention the area to be sold in terms of carpet area and not super built up area. Thus, buyers can clearly differentiate and take informed decision while buying an asset,” observes Amit Chawla, Associate Director, Valuation & Advisory Services, Colliers International India.
You may also watch:
7. Project Quality
Now with developers competing on product quality, timelines, and product specifications, homebuyers will benefit from better product quality which was a rare thing earlier.