It is the time for home buyers to cheer as the Real Estate (Regulation and Development) Act, 2016 (RERA) comes into force from 1 May 2017. The Act, after implementation, will protect home-buyers and regulate the real estate sector that was largely unregulated in India.
There will be penalties on developers if they do not adhere to delivery guidelines that will ensure timely and fair delivery of homes. Here is a list of top five benefits of RERA:
1) Fair pay: Under the RERA, home-buyers will pay for the carpet area. Carpet Area means the net usable floor area of an apartment, excluding the area covered by the external walls. However, it includes the area covered by the internal partition walls of the apartment. The law makes is mandatory for developers to clearly give all flat-related details.
2) Secure investment: Now, the developers will have to transfer 70 per cent money received from home buyers to an escrow account. The move will prevent buyers’ money to be used in many new projects. Developer, within three months of applying for registration of a project with the Real Estate Regulatory Authority, will deposit in a separate bank account , 70 per cent of the amount collected and unused for ensuring completion of ongoing projects.
3) Transparency: The law makes it mandatory for developers to pass all the project plan, layout and government approvals related information to the customers. The transparent process will enable buyers to know the real time status of their dream houses.
4) Mandatory clearance: Under RERA, developers will have to get necessary clearance before selling the projects. Also, no promoter will advertise, sell or invite people to purchase any plot, apartment or building without registering the project with the Real Estate Regulatory Authority established under this Act.
5) Time bound home delivery: Currently, if a project is delayed then the developer does not suffer in any way but, according to the new law, any delay in project completion will make the developer liable to pay interest to home buyer. Over 2,300 real estate projects were being developed at the end of December 2016. Of that, 826 housing and 60 commercial projects were facing significant delays, Assocham stated in a recent report.
According to experts, people should wait till 1 May 2017 if they are planning to buy houses as RERA will be implemented on this day and it will protect home buyers’ interest.