Real estate is a huge sector with the basic aim of fulfilling the housing needs, which are always booming. Especially in a country like India, boasting to be the second-most populous country, the housing needs of people are ever-increasing. This has led the real estate companies to explore their chances of benefits to the maximum. In some instances, this had lead to some unfair practices.
For a long time, the voice was raised for a regulatory framework in the real estate sector which finally came into reality in May 2016 in the form of the RERA Act.
RERA (Real Estate Regulatory Authority) Act 2016 is a law passed by the Indian Parliament in 2016. The main aim of RERA is to increase investment and protect the interests of customers in the real estate sector. On March 10, 2016, the RERA bill was passed in the upper house of the Parliament, thereby paving the way for the RERA Act. After this, the Lok Sabha passed it on March 15 2016. It came into force on May 1 2016, in which 59 sections were implemented on May 1, 2016, with the rest of the act on May 1 2017.
Homebuyers have been complaining for a long time that real estate transactions were unilateral and mostly favouring developers. The RERA and the government's model code aim are to determine equitable and fair transactions between the seller and property buyers in the primary market. It is expected that RERA will facilitate real estate procurement by bringing better accountability and transparency.
Also, the provisions of the states will not undermine the spirit of the central law. RERA is the first regulator of the Indian real estate industry. Under the Real Estate Act, it has been made mandatory that all the states and union territories form their regulators and rules, according to which the functioning will be done.
Some of the vital compliances are:
The most positive aspect of this law is that it provides a unified legal system for the purchase of flats, apartments, etc., as well as standardizing it throughout the country.
Establishment of regulatory authority: The need for the proper regulator for real estate (such as the Security Exchange Board of India for the capital market) has been around for a long time. Under this law, Real Estate Regulatory Authority will be set up in every state and union territory. The aim is to protect customers' interests, store the data collected and create a robust complaint redressal system.
Compulsory registration: According to the central law, all real estate projects (where the total area to be developed is more than 500 sq.mt or more than eight apartments are mandatory to be built at any stage). It is mandatory to be registered in the RERA of your state.
Reserve Account: The main reason for the delay in projects is that the money for one project is deposited and invested in another project. To curb this, the promoters will have to keep 70 per cent of the project money in a separate reserve account.
Customers can see the progress of the project: After the implementation of RERA, home buyers will know the progress of the project on RERA's website. The promoters will have to inform the regulator at regular intervals about how much work has been completed in the project.
Standardization of sales agreement: Under this law, there is a standard model of the sale agreement between the promoters and the home buyer. For example, the promoters introduced several clauses for home buyers, which were punishment for them, but if the promoters made a mistake, then no penalty were imposed on them. But such clauses will now be a thing of the past, and home customers will get a balanced agreement in the future.
RERA has proved to be a boon for homebuyers. The unregulated real estate sector has come under the radar of regulatory authorities which ultimately benefits the homebuyers. The act has brought transparency in the system with a curb on arbitrary price hike and delay in project deliveries by the real estate developers.