With Home Loans being easily available, purchasing a house has become a lot easier than before. But, if you’re planning to buy your dream home now, you may want to postpone the purchase for a few days.
Wondering why? Well, the Real Estate Regulation & Development Act (RERA) will come into effect on the 1st of May, 2017, in all the states across the country. RERA brings with it the much needed transparency and accountability that was missing in the real estate regulations. And, also, the new law is going to be extremely beneficial to real estate buyers like you. Cheer up, homebuyers!
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Here are the key features of RERA:
- RERA makes it mandatory for all states to establish a State Real Estate Regulatory Authority. Buyers can address all their real estate grievances to this government body. Both residential and commercial real estate grievances will be handled by this regulator. This move aims to reduce real estate disputes and make the process more transparent.
- Whether it is an ongoing project or an under-construction one, the state’s regulatory body has to be in the know. It is mandatory to register all commercial and residential projects if the land covered is over 500 square metres or includes a total of eight apartments or more. If any developer fails to register the project, he will have to pay a penalty of up to 10% of the project cost. If the developer repeats the offence, he will be serving time in jail.
- Till date, developers used to collect money from buyers and direct the amount to starting new projects without utilising the same to complete the ongoing project. With RERA coming into effect, developers have to mandatorily deposit 70% of the money collected from buyers in a separate account to meet the requirements of the construction in progress. This will ensure that projects are completed on time.
- With RERA, developers/promoters have to register every phase of a construction project and each of these phases will be considered as a standalone real estate project. This provision is a very important addition to the real estate sector and addresses grievances related to buyers purchasing apartments offered on sale even before the project is launched and getting ensnared.
- Developers have to mandatorily disclose all details pertaining to a project to the State Real Estate Regulatory Authority and then pass this information on to the buyers as well. Details include the project plan, the layout, approvals obtained from the government, land title status, sub-contractors linked to the project, completion schedule, etc.
- RERA defines carpet area clearly. So, there will be no more selling real estate on the basis of ambiguous built-up area. Such dealings are considered as illegal with the new law.
- As of today, project delays do not affect the developers in any way. However, from the 1st of May, if there is any delay in the real estate project, the developer is liable to pay the same interest to the buyer equivalent to the Equated Monthly Instalment (EMI) that the buyer pays to the bank.
- If a developer breaches the order of the appellate tribunal of the RERA, he will have to serve a maximum jail term of three years. A fine may be imposed along with the jail term.
- The new law allows buyers to contact the developer in writing to demand for after sales service if there are deficiencies in the delivered project. The buyer gets to enjoy this advantage for a year after taking possession of the property.
- Once a project plan has been sold to a buyer, the developer cannot make changes to the plan without getting a written consent from the buyer. This will help put an end to the common practice by developers wherein they increase the cost of projects.
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Hopefully, RERA will help get rid of fraudulent developers in the real estate market and level the playing field for the reliable players. For now, just wait till the 1st of May to buy your dream property. In the meantime, you can finish up your other requirements, like checking how much Home Loan you are eligible for or comparing between Home Loan offers.