What Is the Importance of RERA?
Find out how the Real Estate Regulatory Authority aims to regularise the real estate sector of India
The prime objective of the Real Estate Regulatory Authority (RERA) is to promote and facilitate the growth of the real-estate sector in an organised way so that it can combat some common issues such as delay in construction, poor quality of construction and defective title of the land on which the project is constructed. The RERA Act was approved by the Parliament in the year 2016 and it came into force from 1 May 2017. Here are the salient features of the RERA Act.
What are important provisions of the RERA Act?
- The builders have to get approvals from various government agencies before launching a project. Without registering the project with RERA, the builder is not allowed to advertise, sell or allow any booking of the project.
- All the original approved plans of the project should be submitted to RERA. The revised plans with alterations should be submitted at a later stage.
- Builders should upload their quarterly reports on the website, as well as details regarding the progress of the progress.
- The builder cannot accept more than 10 per cent of the cost of the project as advance or as an application fee from the buyer before signing a registered sale agreement.
- One of the most important provisions of this Act is that the builders of the project have to deposit 70 per cent of the funds that are collected from buyers in a separate escrow account. This money will only be used for the construction of the project and shall include the cost borne towards the purchase of land.
- The builder will have to furnish details such as the revenue collected from allotees and details about the utilisation of funds, as well as the timeframe required for the completion and delivery of the project. All this information has to be certified by an architect, engineer and practising chartered accountant so as to enable withdrawal of funds depending on the percentage of construction work in progress.
- The sale of all properties will be based on carpet area and not on super built-up area. With RERA, there is a standard formula for calculation of the carpet area.
- RERA shall ensure good quality control, as the builder has to rectify any structural defect or faulty construction for a period of five years from the date of handing over the project.
- RERA has the right to reject the registration of a project if it does not adhere to its framed guidelines.
How will the RERA Act help homebuyers?
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Browse through exterior design ideas on Houzz photos
How will RERA help in curbing malpractice in the real-estate sector?
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Have you invested recently in any RERA-compliant project? Share your experience in the Comments section below.
- RERA reduces the risk of builder insolvency because the builder has to deposit 70 per cent of the buyers’ money in an escrow account, which will be utilised for construction of the project. As a result, the funds can neither be diverted nor can they be used for any other purpose.
- RERA eliminates unscrupulous builders, protects buyers from fraudulent sellers and ensures safety of the homebuyers’ investment. Therefore, the real-estate industry will only include genuine and honest builders, who will engage in good-quality construction of projects.
- Since the selling of projects is done ethically on the basis of carpet area, the buyer gets what they have paid for.
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Tell us:
Have you invested recently in any RERA-compliant project? Share your experience in the Comments section below.
- The RERA Act intends to bring in a major transformation in the real-estate sector by establishing the Real Estate Regulatory Authority. After the Act came into force, most of the states and union territories of India have established an Appellate Tribunal which exercises all the powers and functions that are assigned by this Act.
- The RERA regulations apply to all commercial and residential properties that have a minimum size of 500 square metres or have at least eight apartments.
- With RERA, there shall be transparency in the sale and pricing of real-estate projects. It shall also ensure timely completion and delivery of the project.
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