For a home buyer the biggest relief provided by the Government of India is the introduction of Real Estate (Regulation and Development) Act also known as RERA. The Bill has been formulated for protecting the interests of aspiring home buyers while at the same time increasing the credibility of the construction industry by encouraging transparency, liability and proficiency in accomplishing a project.
The real Estate sector contributed 9% to the country’s GDP between 2011 and 2015. Being the second largest employer after agriculture it was important to put an effective regulatory mechanism for methodical growth of the sector.
Over the years the Real Estate sector has assimilated a degree of discredit due to the opaqueness in the sector. Various complaints had been filed against the defaulter developer and thus to clear the apprehensions of the consumers and increase the transparency and clarity in the financial transactions and construction details, the model came into existence.
As per the industry information, 10 lakh buyers invest every year to own a house in the country, therefore, it became important for the government to build a model for the safety of the home buyers and regulate the cropping differences and opaqueness between the buyer and the seller. The Bill ensures greater accountability towards consumers and reduces frauds and delays. It attempts to balance the interests of the consumers and promoters by imposing certain responsibilities on both the parties.
RERA plans on strengthening the sector by imposing certain responsibilities on the developers which helps the home buyers by creating transparency in the deal between buyers and sellers.
RULES FOR A BUILDER/DEVELOPER UNDER RERA GUIDELINES
• Compulsory registration of new and ongoing projects
• Builder/Developer has to provide sanctioned plans, layout plans, with specifications, permitted by the concerned authority
• Builder/Developer has to publish entire details of the project on the website of the Regulatory Authority
• Not more than 10 % of the cost of the property can be demanded as an advance payment or application fee
• Builder/Developer has to open an escrow account in a government authorized bank
• 70% of the amount collected from the buyers should be deposited in the escrow account to meet the construction cost
• RERA imposes strict regulations to ensure that construction is completed on time
• Carpet Area should be clearly defined while registration
• Developers can only sell after the necessary clearance
• An Appellate Tribunal is also formed to address the issues between both parties
To strengthen the prospective buyers from fraudulent developers and developers the bill made it mandatory for the builder to register the project with the RERA prior to the commencement of the project. RERA issues the Commencement Certificate to the builder, as an approval for the construction of the project. It is the duty of the RERA to resolve the disputes cropping between the parties by suggesting a medium or by imposing a penalty or granting any sort of punishment to either.