The Real Estate Regulations Act was formed by the Parliament of India in May 2016. This much awaited Act was passed, mainly in the interest of home buyers. This move is expected to benefit the home buyers a lot. The rules stated under RERA apply for both real estate as well as commercial projects. But the million dollar question is, will it bring transparency in the system as expected?
Developers around the country have mixed reactions to RERA. Some of them are happy with the law while some of them are finding it difficult to survive. Aksha Group, one of the top builders with lot many new construction projects in Pune seemed to be very happy with the formation of RERA Act. Their Chairman, said that transparency in the real estate sector was very much needed. Developers like Aksha Group who have always been honest & transparent with their buyers are happy that the buyers will start trusting the developer more now. There is no scope of fraudulent acts anymore. Aksha Group has 1, 2 BHK flats in Moshi, Chikhali, Pune.
Let’s read through the some of the outstanding features in the statute
- Registration of projects:
Pre registration of the projects above 500 sq meters is compulsory. All the documentation has to be done before the registration process starts. The entire registration process will start only once the documentation is done. After approval from authority on documentation the developer will receive a registration number.
- No Pre-Launch sale of projects :
Builders cannot go ahead and the launch the project without the registration number & approvals on registration. The sale of property before registration ie usually “PRE-LAUNCH” offer will be history now. This is definitely good news for buyers.
- Sale of Projects on Carpet size area only:
Buyers usually get confused over what exactly is the carpet area of the house. Carpet Area is the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.
This will get transparency to the buyers as they will exactly know what they are getting. They wouldn’t at least get confused with the Carpet Area being the Saleable Area.
- Restriction on use of funds:
RERA has made it compulsory for the builders to deposit 70% of the amount received from the buyers in a separate account which will be used for that specific project only. This will ensure that the buyer’s money doesn’t get misused. In case the developer is short of finance for some part of the project he will have to approach financial institute himself.
- Delay in possession: Incase the builder fails to give possession before the specified date, the buyer has full right to withdraw his money from the project. The developer will give full refund along with interest. In case they still want to continue then the developer will give interest every month to the buyer till possession.
- Penalty on false advertisements:
In case the developer doesn’t give facilities to the home buyers as per the advertisements given by him or the developer gives false promises & doesn’t comply to it then the home buyers can withdraw their amount and will also get it along with interest.
- Insurance of Land & Construction:
As per the norms laid by RERA, it is compulsory for developers to get the insurance for the land title as well as the building insurance for the construction part. This cost will definitely be thrown in the buyer’s kitty. This clause still has to be made in the insurance companies as well.
Let’s hope RERA will bring in some positive changes in the system.