Real Estate (Regulation and Development) Act (RERA), 2016 came into effect on 1st May 2017. RERA marks the beginning of new era with bringing in more clarity in deals between developers and buyers leaving out ambiguities. This Act will help the buyers in many ways and will increase the confidence of homebuyers and ensure if there is any wrongdoing by the developer, there will be a redressal mechanism through RERA court or consumer forum.
RERA is a Central Act and under the Central Law, each State has to notify rules and set up a Regulatory Authority to manage the real estate Sector which shall improve the governance and hold on the Sector reducing disputes to a great extent.
IMPORTANCE OF RERA
According to the Ministry of Housing and Urban Poverty Alleviation (HUPA), there were 76,044 companies operating in the real estate sector at the time of passing of the Bill in Rajya Sabha in March 2016. RERA is of extreme importance as it will be applicable to more than76,000 companies across the country.
More transparency: builders will have to deposit 70% of the funds collected from buyers in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects to ensure sufficient funds for the project to get completed on time. This will be a big relief to the buyers as timely delivery of the project is the biggest factor or cause of concern for the buyers.
As RERA aims to make transactions clearer and more transparent it will benefit the homebuyers. It will further attract more Foreign Direct Investments (FDI’s).
Developers will now have to get all the ongoing projects that have not received completion certificate and the new projects registered with Regulatory Authorities by July end, 2017. However, Cost of developers will rise as project can continue or start only after the project has been registered with the concerned Regulatory Authority.
Both developers and buyers will now have to pay the same penal interest of SBI’s marginal cost of lending rate plus 2% in case of delays.
Developers will be liable for structural defects for five years.
RERA will impact the real estate or real estate brokers in many ways- Now even brokers are to be registered with state level real estate Regulatory Authority. Brokers in unorganized sector need to get a license to operate.
Under RERA there shall be a code of conduct for the agents and all transactions have to be official this will ensure there is a no unfair trade practices.
The Indian Lawyer