In May 2016, the Indian government passed the RERA Act to facilitate the home buying process. After RERA was established, homebuyers, builders, brokers, and other stakeholders in the real estate industry expressed their concerns. It has implemented numerous reforms since its inception, and more are on the way. Therefore, understanding RERA rules and guidelines will make your life easier as a home buyer or builder. Check out RERA, its impact, and more.
What is RERA?
RERA stands for Real Estate Regulatory Authority, which is the full form of the organization. Disparities and problems within the sector were addressed through this initiative.
Why is RERA (Real Estate Regulatory Authority) needed?
RERA committees have been set up across India as part of the RERA Act to regulate the real estate sector and promote uniformity and transparency. If you want to find out more, visit RERA Karnataka, RERA Delhi, RERA West Bengal, RERA UP, RERA Punjab, RERA Goa, etc. As a result of RERA, builders and developers are required to inform homebuyers about construction progress, provide keys to their properties by the specified deadline, and adhere to all RERA rules to ensure accountability.
Key benefits offered by RERA
The RERA has brought about positive changes in every aspect of the real estate industry. You can do this by following these steps:
- RERA aims to reduce property fraud and project delays. RERA registration has been mandated for all builders/developers before they begin a project.
- The REERA has been divided into smaller regulatory bodies that oversee real estate development in individual states and union territories.
- The RERA applies to both residential and commercial properties.
- Standardization introduced by RERA is aimed at protecting both buyers and developers.
- As a result of the RERA Act, the real estate industry has become more accountable and transparent.
How will RERA impact homebuyers?
- The RERA offers several benefits to homebuyers. Check out what they are.
- Under RERA’s rules, builders must disclose every aspect of their projects on the official website of RERA.
- A more important requirement is that information must be updated on a regular basis. By doing this, buyers are assured that project timelines are transparent.
- In accordance with RERA rules, you pay based on the carpet area or the walled area of the property. It is illegal for builders to charge you for the super built-up area, which includes lifts, balconies, stairs, and lobbies.
- During the construction process, builders are required to put 70% of the money they collect from home buyers into a separate bank account that they can only use for construction expenses.
- The RERA emphasizes the importance of completing projects on time. You will be charged interest of 2% over SBI’s MCLR for any delay.
- It is possible to report construction defects for up to 5 years after receiving the handover and have them rectified by the developer.
- A dispute between a developer and a buyer must be resolved within 120 days following the filing of the dispute.
- Developers and builders cannot alter or add to the building plan without notifying two-thirds of the owners. Only a majority of homebuyers can approve it.
- As a result of the Act, developers are not allowed to take more than 10% as an advance from homebuyers.
- At the time of possession, you can ask for compensation from the developer if you discover a discrepancy in your title deed.
The carpet area defined under the RERA Act
In accordance with the guidelines, the carpet area of a house or apartment consists of the area inside its four walls. A super-built-up area cannot include amenities or common areas.
How will RERA impact real estate agents?
Due to RERA, builders and developers must be more transparent. Real estate is affected by RERA in the following ways
- Projects exceeding 500 square feet should be avoided. If there are more than 8 apartments in the building, the project must be registered with the state’s RERA.
- The builders are required to deposit 70% of the money collected from homebuyers into bank accounts through checks. The rule prevents builders from engaging in fraudulent transactions or laundering money. There has to be a record of every rupee spent or gained.
- Builders and homebuyers will use the same model sale agreement.
RERA Act in different states of India
It has been two years since RERA was passed, and currently, 22 Indian states and six union territories follow it. The RERA has not only been implemented but it has also been actively used to resolve complaints and disputes in each state.
For instance, As of April 2019, MahaRERA or RERA Maharashtra has received around 6,631 complaints and settled 64% of them. In addition to West Bengal, Manipur, and Assam, other states are gearing up to launch their RERA websites.
What are the penalties under RERA?
You can file a complaint with RERA or the Appellate Tribunal as a home buyer. In accordance with the offence that you mentioned, the developer or promoter is subject to a penalty. Following is a list of penalties they could face if found guilty.
- Promoters who fail to register under RERA are required to pay 10% of the project’s estimated cost. In addition, they are charged 5% of the project’s estimated cost if they provide false information.
- Promoters who violate laws could be jailed for up to 3 years or fined 10% of the estimated cost of the project.
- When agents conduct construction and sales on their projects without RERA registration, they are charged Rs. 10,000 per day up to 5% of the project cost.
- In case of severe non-compliance with RERA, developers will be penalized by 5% of the project’s probable value per day.
- The penalty for non-compliance with the Appellate Tribunal is imprisonment for up to one year or 10% of the project’s probable cost.
In addition, buyers are also required to adhere to RERA. You will be fined up to 5% of the approximate cost of the project if you are found guilty of non-compliance. Alternatively, non-compliance with the Appellate Tribunal may result in imprisonment for up to 1 year or a fine of 10% of the project’s estimated cost.
How to register projects under RERA
Follow these steps to register a project under RERA Arunachal Pradesh, RERA Sikkim, RERA Haryana, RERA Kerala, or any other state:
- The RERA Act specifies that opening a bank account and collecting all required documents are the first steps.
- Register with RERA by filling out and submitting Form A. Promoters and agents must also submit Form B, indicating their role in the industry.
- As per RERA rules, you may also need to submit other forms to clarify your project’s details.
- To complete the registration process, you must pay the RERA registration fees. State by state, the amount varies.
- For all future communications, use the RERA number assigned to you and the project.
Projects that come under RERA
Once all states and union territories comply with RERA, all real estate projects will be governed by it. Here are a few conditions that determine whether a project falls under RERA.
- A RERA project is one that does not have a completion certificate but was completed prior to the implementation of the RERA Act.
- Construction projects that are undertaking a renovation, repair, or redevelopment but are not re-allocating, marketing, advertising, selling, or allocating any apartments, plots, or buildings will not fall under RERA.
- Construction projects must register each phase of construction separately through a new RERA application.
Real estate agents who violate the RERA regulations of 2016 will face harsh repercussions under the law. We will learn about the various types of offenses, and the penalties associated with them. RERA Act Section 66 provides for an individual or agency found guilty of disregarding the appellate tribunal’s instructions to be imprisoned for a period of one year and fined 10% of the project’s cost.