Before the RERA was introduced in 2016, there was there was no regulation on the advance payment the builder could demand for an underdevelopment project; it is now fixed at 10%
To protect the interest of homebuyers while boosting investment in the real estate sector, the government in 2016 had introduced the Real Estate (Regulation and Development) Act, also known as RERA. The Act, which became effective on May 1, 2017, was introduced to meet the long-pending demand of buyers who complained that real estate transactions were lopsided and heavily in favour of the developers. The provisions of RERA aim to create a more equitable and fair transaction between the seller and the buyer of properties, especially in the primary market.
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Under RERA, real estate agents are required to have a registration to be able to facilitate a transaction. If you also have been looking to buy a new property and have been wondering what RERA is all about, here are five key things you must know:
Project Registration
Every real estate project of more than 500 square meters (sqm) needs to be registered under the Real Estate (Regulation and Development) Act. The builder has to submit information regarding the legal permissions for the project, project layout, financial statement and other required information. Following the approval, RERA will provide a registration number to the builder.
Advance Payment Cap
Before the introduction of the RERA, there was no regulation on the advance payment the builder could demand for an underdevelopment project. Now, RERA has fixed a cap of 10 per cent of the project cost as an advance or application fee.
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Rate Regulation
RERA has introduced a standardised method for the calculation of the cost at which the project will be sold to the buyers. The property will be sold only based on carpet area and not on super built-up area
Project Deadline and Fund Regulation
The builders will have to submit a delivery date for their project. Any delay in the delivery of the project to the buyers shall invite a penalty for the builders. Additionally, the builders are required to deposit 70 per cent of the money received from buyers of a specific project into a separate account. This is to avert the diversion of funds from one project to another.
Grievance Redressal
The Act mandates the establishment of an appellate tribunal in every state and Union Territory to handle the complaints of the buyers. The tribunal needs to address the complaints within 60 days of the date on which the copy of the direction or order is made and is received by the aggrieved person along with the accompanying fees.
