RERA Act – Changes in Real Estate Industry in India

RERA stands for the Real Estate Regulatory And Development Act. It came into reality on May 1, 2017. The main objective of RERA is to regulate the real estate sector of India with strict rules and to stop the fraudulent acts in the real estate field. This act will surely help to empower buyers and investors with their rights rather than getting cheated.

The features of RERA are completely consumer-friendly and is appropriate for managing any transaction relevant to real estate like

1.More security to the investment made by first-time buyers.
2.Better assurance of timely possession.
3. Strict action against false promises.
4.Digitalization of all records to reduce the loss of data.

Now let’s discuss the major changes that happened before and after RERA.

1.Registration

Before the RERA, many developers started their projects without valid registration. But the RERA act has made the registration of every project compulsory. Without registration, no builder can proceed with the construction, sell any plot, or take any advance, make advertisements for selling or get into any agreement.

2.Advertisement

Before RERA, advertisements for projects will be given and potential buyers will be shown empty plots and they will be promised that a project will be constructed there. In most cases, no projects took place even after years.RERA act bought a drastic change to this. According to this act, no false promises can be given,whatever is there in the advertisement should be there in reality otherwise buyers have the right to sue builders.

3.Transferring Right

Before the RERA act was implemented,even if the project got transferred from one builder to another, the buyers were often not informed. If the buyer faces any issues, then the previous builder will refuse to respond citing the reason that they don’t have any more responsibility for that project leading the buyer to a dilemma.
But the RERA act clearly insists that if the project gets transferred to any other person, it should be informed to all the investors, buyers and the authority.The name and ownership should be changed in all documents. Everything should be done in a prescribed way and until all the procedures are complete, the previous owner can’t be released from the responsibilities.

4.Timely possession

Before the act, there was no assurance that the property would be delivered to the buyers. Often the projects gets delayed by 10-15 years and many times the project may not have even started at the promised delivery date.

After RERA if the possession is delayed for an unreasonable period, the buyer is entitled to alternative shelter until the project is completed. Money back policy along with interest or alternate residence of same standard that has been promised by the builder should be given for buyers. If the buyer faces any extra cost at the alternate residence, builder has to bear
it.

5.Quality of material

When a sale deed of a property or a plot is prepared it is mandatory to mention the quality of each material that is to be used. But often it was seen that builders use lower quality material as cost cutting measures which in turn affects the owners as these items gets damaged soon.RERA act completely states that builders have to use these promised products, in case the worst quality products are used, the builder has to pay compensation for that.

6.Essential documents

Before RERA,the only document that buyers get is the sale deed which always kept them in ambiguity regarding the project.
After RERA, all builders are obliged to hand over the necessary documents related to the project and the area of the plot where the buyer is investing. These documents include a brochure, a copy of real estate registration, copies of the drawings of the flat and the project where he is investing.

7.Bankruptcy

Builders after taking money from buyers leave the project incomplete and used to declare themselves bankrupt. That used to safeguard builders from liabilities and ultimately buyers have to suffer.
After RERA,the builder has to open a separate account for the project. This account should be totally separate from the personal account of the builder, or any of his relatives or friends. The builder has to transfer 70% of the money raised, in that account, which will be used only for the purpose of the project.

8.Post possession liabilities

Before RERA was implemented,the builder used to go totally non-responsive towards any issue occurring to the project, the law earlier prescribed was that any damage occurring within six months after possession will be taken care of by the builder but RERA act made the tenure of builders responsibility to three years after possession.

9. Carpet Area

Most often builders used to cheat buyers on sq.ft area of the property.Buyers are made to pay for super built-up area which actually includes non-useable areas too.

According to RERA, consumers have to pay money for the carpet area only. Carpet area includes internal partition walls, all rooms,kitchen, toilet,bathroom,
Cupboard space, staircase within the property area.
Carpet area exclude area covered by external walls, service shaft, balcony, utility area, open terrace, lift and lobby,staircase, verandah, clubhouse, etc.

Builtup area=carpet area+external walls+balconies+service shaft.This area is approximately 10-15% more than the carpet area.
Super built-up area=built up +sharing of common areas like lobbies, life shaft, staircase, air ducts, clubhouse, pipe ducts, and other covered common facilities. It is 10-40% more than carpet area.
RERA will surely bring drastic changes in the real estate industry. It will boost home buyers and also the real estate industry.