The Real Estate Regularity Authority (RERA)

Introduction

On May 1st, 2016, the Indian Government established an act for the Real Estate Regulatory Authority to regulate and promotion of the real estate sector and to ensure the To protect the interest of the consumers. To bring efficiency and transparency to real estate development.

To protect the interest of the consumers.
To bring efficiency and transparency to real estate development.

Why was it Introduced(Problem)

In India Before 2016, People were hesitant to buy an under-construction property, due to the:

Delay in Construction time
With low transparency, the probability of brokers/developers scamming the buyers were more.
There was low trust and transparency between the buyer and the seller.

Eco-System

This is how the ECO-System worked before RERA:

When a builder announces the construction of a building like an apartment, The builder starts to sell the under-constructed apartment as an Advance Payment starting from 10% and going on up to 60%. The money collected didn’t go to the property one bought instead, it goes for the new project. The buyer might be thinking what’s the problem here? Due to this,

The construction time of your building will keep on getting increased
If the other property which they have invested with your hard-earned money goes into litigation or problem, the building you have bought will be further delayed, or worse the builder might declare insolvency.
All this would happen without your knowledge, Buyers won’t even know who is the builder, or whether all the documents have been approved or not by the government, due to the lack of transparency in the real estate market.
Buyers were not able to complain about the problems they faced.
Most buyers take a bank loan to buy the apartment, believing it’s more affordable than a fully constructed building and appreciates its value in the future, when a problem like this occurs they have to face the consequences, the worst part is they still have to pay the bank loan, even if the apartment has stopped the construction.
Buyers approached the court to resolve their issues, but due to the vast number of existing cases makes it a tedious legal process and caused long delays in resolving Buyer issues apart from the time and cost.
In certain situations, the property consultant also face scrutiny, without his mistake.
Due to all these problems, there has been low trust in the Real Estate market, resulting to the buyer suffering the brunt in the end.

How Rera is impacting the eco-system

These are some of the important changes that happened after RERA was introduced

Improving Transparency: Under Rera Act, every builder has to give the following info about the property: Building info: To know about the information visit the “Rera website”, and search for the project name will get the list of information such as:
- Project Builder, their past projects, Status of the building, Approved Date, Date of the project completion, Complaints/Litigation of the property.
Property consultant: Every property consultant who wants to sell a property has to register through RERA like brokers in the stock market.
Documents Approved by the government and other important things. If a builder has a project exceeding 500sq meters they must be registered in the RERA. If not, they must pay 10% of the total project cost as a fine.

Impact on buyers

Advance payment: According to the RERA Act builders can’t ask for more than 10% of the building amount as an advance.
Defect after possession: If a builder has constructed the building poorly, they must rectify it within 5 years from handover.
Construction on time: If a builder is unable to finish the building on the projected time, they will be charged with a fine.
Legal filing: If a builder has not constructed the building according to the Standard deviation/Proposed Promise the buyer can complain about it through RERA and the problem is sorted sooner also know the number of cases the builder is currently facing in court.

Conclusion

Finally, as a buyer, it’s always important to know what are the trends and the new changes (like Fractional Ownership, REITS, etc.) happening in the market. The RERA body is and will bring structure into the real estate industry and bring about the change that we need to protect all parties.

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