RERA – Face of Change for the Real Estate Lobby
Before the advent of RERA (Real Estate Regulation Act) there was utmost difficulty that was faced by consumers for various reasons which include delayed delivery and change in project layout amongst many others is estimated to be eased by the enactment of this Act. The basic reason behind this ease is the penalty clauses that are there in this Act which is there for non-performance or deficiency in services. The unreliable builders will now have the fear and threat that their actions are being watched out and they shall not be allowed to roam freely post doing unlawful acts or by not delivering services up to the mark as now there is an Enactment which is having strict compliances and for every non-compliance the penalties and fines are hefty in nature. It has also benefited the builders as now they can approach the Regulator in case of any issues with the buyer etc.
The RERA bill was introduced in the year 2013 and finally the bill got approved in march last year. Although it is a Central Law but the implementation will be dependent on State Governments. Most of the states have approved the Act and thus RERA is now almost full fledgy in force and is benefiting both the buyers and the consumers. Each state will have to mandatorily setup Regulatory bodies which will serve as Appellate Tribunals to solve the dispute between builders and buyers within a specified time period of 120 days.
The mass effect of the Act is to safeguard the buyers/consumers and to save them from the clutches of the builders and also on various other aspects as to have a transparency on construction cost, making registration compulsory for certain builders etc. RERA has made it compulsory for the builder to invest a minimum of the 70% of the amount received from a buyer in a separate bank account in order to meet the construction of the project and the large effect of this would be that now the builders cannot demand money from buyers by keeping the construction at halt because of lack of funds. The registration of builders with Regulator for commercial and residential real estate projects in cases where the land is above 500 sq mtrs or the apartment number is eight or above will ensure strict compliance for them and in case of non-compliance from their side they cannot roam freely likewise till date because it has strict regulations and the basic emphasis is on the project completion in time. The most awaited development was the pricing which previously was based on super built up area is now on carpet area which is clearly defined to include usable spaces like kitchen and toilets. Among the other benefits to buyers / consumers some include the timeline for repairing the structural defects being increased from 2 years to 5 years, on going projects are also included under RERA, compulsory to update the progress on the website of RERA to ensure greater transparency etc.
The builders have been regulated very strictly as they will be strictly penalised if there is any discrimination to sell the flats because of religion or caste issues etc, selling or handing over the ownership can be done only after obtaining the necessary clearances and no deviation will be accepted. The developments in relation to the pricing of the houses on carpet area instead of super-built up has brought in a lot of relief and has eradicated the huge difference in pricing.
The RERA has made it compulsory for all property brokers to register so that a track can be there and it will also ensure transparency. The registration will happen in the respective states of the brokers and with the registration it is propelled to sieve out the small time players and to consolidate the major ones.
Thus overall the enactment and implementation of RERA has brought a massive and much needed change in the real estate lobby by compulsory registration, opening of different bank accounts for different projects etc. The overall impact will lead to greater transparency, making the buyer and seller stand in a single place by removing the extra benefit that was only taken by the builders and middle men and leaving the consumers/buyers in dark. The Act has also empowered the builders that now they can also raise issues about buyers who do not pay their dues in time. Therefore to sum up it is a mix bag with regulatory procedures and developments for the builders as well as the buyers.