Real Estate Regulation Act - RERA

Article ID: 9
Creation Date: Friday February 26, 2021
Author: Administrator

Online URL : https://www.realestateindiaonline.com/real-estate-articles/real-estate-regulation-act-rera.html

RERA or Real Estate Regulation Act of 2016 is an Act to establish a regulatory body for regulation and promotion of the real estate sector.

What is RERA or Real Estate Regulation Act of 2016? How does it affect the Real Estate industry in India? RERA is an Act to establish a regulatory body for regulation and promotion of the real estate sector.

The key objectives are:

  1. Infusing transparency & efficiency w.r.t., sale of plot, apartment, building or real estate project.
  2. Protecting the consumer`s interest.
  3. Establishing a fast track dispute resolution mechanism.
  4. Promoting good governance in the sector and creating investor confidence.

What are the main effective clauses in the RERA?

  1. Project launch or advertisement are not allowed before registration with RERA
  2. 70% of the funds collected from allottees needs to be deposited in the RERA account. Withdrawals allowed to cover project cost.
  3. Transparency about the project enabling buyer to take informed decision as project plan, layout, approvals, land title status, sub-contractors are in public domain.
  4. Consent of 2/3rd allottees for any major addition or alteration in plan.

Is RERA applicable to on-going projects or projects under construction?

RERA is applicable for all residential & commercial projects that have not received their completion certificate / occupancy certificate as on 31st July 2017.

Is the RERA Act applicable to smaller projects?

Registration of the real estate project is not required, where the land area for development of real estate project does not exceed 500 sq.mtrs or the number of apartments does not exceed 8.

Will buying property in India be impacted after RERA implementation?

The implications of RERA are likely to be -

  1. Increased buyer confidence for apartments on offer from reputed developers.
  2. Transparency as all information about the project is available on RERA website thereby buyers can make informed decisions.
  3. Superior quality of construction due to a defect liability period of five years.
  4. Timely delivery as stiff monetary penalty prescribed for defaulters.
  5. Customer grievances are heard by RERA and speedy dispute resolution.

Will RERA focus on the carpet price of the property?

The biggest benefit transpiring out of RERA that will interest buyers is the carpet area-based pricing module. RERA will empower buyers with a standardized carpet area value comparable with various other offerings from different developers in the same locality. The new pricing model will offer a level playing ground to both buyers & developers.

How does RERA affect the builders?

Builders and developers are impacted in the following ways -

  1. Increased buyer confidence for apartments on offer from reputed developers.
  2. Ease of availability of funding at cheaper rates for reputed developers due to increased investor/financial institution confidence in the sector.
  3. Consolidation of real estate sector and thereby higher market share for reputed developers with good delivery track record.
  4. Controlled supply as developers are cautious on new launches in the interim, thereby reduction in inventory levels.