What is RERA?
As per the Real Estate (Regulation & Development) Act, 2016 – Real Estate Regulatory Authority (RERA) would regulate and promote the real estate sector. The RERA will –
• Ensure the sale of land or building or a project in an efficient and transparent manner
• Protect the interests of consumers/buyers
• Establish an Appellate Tribunal mechanism to ensure speedy redressal of disputes
• Covers both residential and commercial projects
What are the provisions of RERA ?
Provisions under RERA:
1. All new projects are required to be registered with the regulating authority if not registered then 10% of the project cost as a penalty will be applicable.
2. As per the new act, developers cannot collect more than 10% of the value of the project in advance.
3. In case of any structural or other defects found within 5 years by the buyers, developers have to bear the responsibility of repairs.
4. Developers have to put aside 70% of project funds in a dedicated escrow account linked to the project and cannot be used for other projects.
5. Norms on the size of projects to be registered with RERA has been made 500 sq.m instead of 1000 sq m earlier.
6. Properties have to be sold on carpet area but not on Super Area.
7. Developers have to post details like the project plan, layout plan, approvals, land title status, details of promoters, contractors, architects, and date of completion on the RERA website.
8. Any violation of an order by the RERA Appellate Tribunal will invite jail term of 3 years.
9. Developers will be held accountable for details furnished; they will have to ensure that false promises are not made to buyers.
What are the advantages and disadvantages of RERA?
Advantages of RERA:
• Right to Information about the Property. This is in favour of the buyers.
• Standardized carpet area.
• Builders will be held responsible for any defect/fault in the construction.
• Grievances will be addressed and solved quickly.
• Builders won’t be able to delay the projects.
• Foreign investors would be attracted due to transparency
Disadvantages of RERA:
Some of the disadvantages are for Developers:
• Developers cannot use this fund in other projects hence new projects cannot be taken up on account of fund of previous projects.
• Regulation requires approvals and permissions which may result in delay of starting/finishing of projects.
• Loss of interest of builders in Real estate projects due to strict regulations and reduced profit.
• Real estate has good employability potentials, but due to RERA developers are discouraged hence employment opportunities are lost.
• Real estate involves use of construction materials which are means of source of earning to many small and large scale groups but due to RERA the number of new projects are reduced hence demand of materials is reduced therefore, it has effect on economy and employment both .