RERA’s Influence: How Does It Benefit the Homeowners and Developers?

Each state is required to :

Set up a structured systemEstablish an online platform for project registrations. Address consumer grievances.Supervise real estate ventures within their respective states.

RERA license :

An agent or a company has to obtain a license to deal in any kind of real estate work. The registration process for agents under RERA (Real Estate Regulatory Authority) is straightforward. Agents are required to submit a fee and an application to the Authority for registration. The advantages of RERA registration for agents include builder details, ensuring ethical handling of clients’ funds, and offering precise and authentic information to the general public.

Registration of Real Estate Projects :

The developers have to mandatorily register their projects before they initiate any new project. This registration ensures that the project adheres to standardized norms and provides accurate information to potential buyers.

Transparency and Accountability :

Developers must provide accurate and detailed information about their projects on the RERA website. This includes project details, layout plans, approvals, completion timelines, and other relevant information. This helps the homebuyers to be sure about their investment.

Adherence to Project Timelines :

Developers are obligated to complete their projects within the specified time frame mentioned in the agreement with the buyer. Delays can lead to penalties.

Advance Payments :

The act limits the advance amount that developers can ask for to 10% before the formal sale agreement is signed.

Quality Control :

The RERA Act emphasizes the need for quality construction and workmanship, ensuring that the buyer receives what was promised.

Carpet Area Definition :

The act specifies that the price of a project should be based on the carpet area of the property, which is the actual usable area within the walls excluding the balconies. This prevents developers from manipulating pricing based on other measurements.

Complaints and Redressal :

The act establishes a process for addressing grievances and complaints from buyers. It also aims to establish a Real Estate Appellate Tribunal for quicker resolution of disputes.

Penalty for Violations :

In case of non-compliance with the provisions of the act, developers can face penalties, fines, or even imprisonment.

Transparency :

It mandates developers to provide accurate project information on the RERA website, limits advance payments to 10% before formal sale agreements, and enforces strict completion timelines to prevent delays.

Home loans made easy :

RERA approved projects make it easier for the home buyers to avail loan from banks making it easier to own a home.

Redressal mechanism :

In cases of delays, buyers are entitled to compensation, fostering accountability. The act ensures construction quality, clear property titles, and establishes a grievance redressal mechanism through the Real Estate Regulatory Authority (RERA).

No misleading Advertisement :

RERA prevents misleading advertising and safeguards buyers from false claims. These provisions collectively enhance transparency, protect buyers’ interests, and promote better practices in the real estate industry.

Website :

Each state has to set up a website dedicated to RERA making it easier for the consumer to access information regarding the project, amenities provided, completion date and other related details.

RERA license :

It is required that the Developers register their projects with the respective state’s RERA before advertising or selling them. All brokers will have to compulsorily register their projects on the website to obtain a license to operate.The registration number allotted will remain valid for five years.The license has to be renewed every 5 years.This adds a level of legitimacy and accountability to the projects.

Financial Discipline :

The act prevents developers from diverting funds collected for a specific project to other purposes. Developers have to maintain a separate escrow account for each individual project. 70% of the advance taken from the homebuyers have to be maintained in the escrow account for construction related developments and land acquisitions. This helps in safeguarding the homebuyers from delays and prevents developers filing for bankruptcy.

Compliance and Accountability :

Developers must adhere to the approved plans, specifications, and commitments made to buyers. The act holds developers accountable for fulfilling their obligations as stated in the agreement.

Timely Completion :

Developers are motivated to complete projects on time to avoid penalties and compensation payments to buyers in case of delays.

Quality Assurance :

Developers must ensure that the quality of construction and workmanship meets the standards mentioned in the agreement. This encourages better quality control in the industry.

Credibility and Trust :

Adhering to the regulations established by RERA enhances a developer’s credibility and helps build trust with potential buyers.

Consumer Confidence :

The increased transparency and protection provided by RERA can boost consumer confidence in the real estate market, potentially leading to increased sales.

Quarterly Updates :

The builder/ developers have to update all the details like the number of units sold, government approvals received or not, any ongoing litigations e.t.c. Every three months details about the progress in construction and other important information related to it helps the homebuyers to stay informed and up to date with the project related details.

Enforcement Hurdles :

Despite penalties for non-compliance, the enforcement of RERA regulations has been slow allowing some developers to violate rules without consequences, causing financial losses for buyers.

Delivery Delays :

Although RERA sets rules for timely project completion, instances of project delays persist, accompanied by insufficient compensation for affected homebuyers. The compensation process can be long drawn and complex.

Authority’s Constraints :

State-level RERA authorities possess limited powers to penalize developers, leading to a lack of accountability.

Escalating Costs :

RERA’s compliance requirements have driven up costs for developers thereby inflating property prices, impacting the consumers.

Overburdening Compliance :

Developers now face additional compliance costs due to project registration, escrow account management, and regular progress updates, ultimately influencing project costs.

Approval Challenges :

The approval process for new projects faces delays due to the need for multiple clearances from various authorities before registration with RERA.

Sector Limitation :

RERA focuses solely on residential real estate, excluding commercial projects, causing regulatory disparities between the two sectors.

Inconsistent Rules :

RERA operates on a state-by-state basis, leading to varying rules and regulations. This inconsistency challenges developers, operating across multiple states.