The real estate segment is going to be reshaped in terms of its regulations with the Real Estate Regulation Act (RERA) which will come into effect from May 1. This much awaited transformation is expected to bring more transparency within segment and expected to benefit buyers in some incredible ways.
Following are the major provisions that will stringent the norms in real estate segment for errant builders:
An authority as State Real Estate Regulatory shall be a mandate under the new RERA policy for each state which can be approached for the grievances of the home-buyers. This government body can be addressed to redress against any builder within the state covered by it.
Under current scenario, in case of delay in transfer of possession, the homebuyers bear the brunt while developers have no harm in such event. The new RERA policy has ensured that the developers must pay the same interest to the homebuyers as paid by them as Emi to the bank by its customers. It will ensure a speedy completion of the projects at the developers end and arouse a sense of accountability for developers.
All the information pertaining to plan layout, land title status, schedule for completion, government approvals, project plan etc shall be disclosed to the RERA authority which shall further be communicated to the consumers to avoid any inconvenience/lack of information on the part of home buyers later on.
A separate account should be maintained by the builder, where 70% of the money collected from the home buyers shall be kept and this will be reserved to meet the cost of construction of the project. It has been noticed in many instances that a builder raising money from one project is employing the same in other new projects thus leading the delay in transferring the possession of project for which the money has already been procured from the home-buyers.
Hence, to avoid such practices and ensuring the completion of construction in time, this provision under RERA has been implemented.
The unambiguous super-built-up area concept shall be replaced by the concept of carpet area. Carpet area is the area between the four walls of an apartment while super-built-up area includes common areas such as lobby and entrances thus misleads the homebuyers.
Selling off projects on the basis of super-build-up area shall be considered as illegal.
The RERA shall make registration mandatory for all the residential as well as commercial projects under the regulator’s ambit. It should be applicable for the projects that are spread over 500 sq m of land or constitutes eight or more apartments. In case of failure on account of such registration, a penalty of up to 10% of the project cost shall be levied upon the builder. The builder may also be sent to jail for repeated failure in registration.
If the apartments have been sold off before the launch of project, the homebuyers shall not ensnare to the project. Developer shall require registration under separate phases as per the new RERA policy. The phase of pre-launch shall be considered as standalone real estate project.
Within 1 year of obtaining possession, the homebuyer may claim an after sale service for any deficiency in the project. The same has to be communicated to the developer in writing by the buyer.
The developer cannot phase out any changes within a sold out project before obtaining a writing consent from the existing homebuyers. This move has been initiated to curb the practise of enhancing the cost of projects by developers.
In case, if a developer violates any of the order of the appellate tribunal of the RERA, he may be imposed with a maximum imprisonment of 3 years with or without a fine.
No doubt, RERA is expected to bring a major transformation in real estate industry by making it more investor/homebuyer friendly.