A lot of cases have been noted where buyers haven’t received the projects even after paying the full amount in advance. The new law under RERA for home buyers provide for a series of safeguards that not only redress such situations but also pre-empt them.
Before digging deep first understand what RERA means.
RERA is the Real Estate Regulation and Development Act of the Parliament of India which assures to protect home-buyers as well as help boost the real estate industry. Under the RERA, Builders need to be punctual for project delivery, they need to pay an interest rate of two percentage points above The State Bank of India’s lending rate to the homebuyers. Errant developers can be subjected to imprisonment for up to three years.
Benefits of RERA for Home Buyers
To meet the construction cost of the project, a developer will have to put 70% of the money collected from a buyer in a separate account. RERA imposes strict regulations on the promoter and ensures that construction is completed on time.
The bill clearly states that the carpet area needs to include usable spaces like kitchen and toilets imparting clarity which was not the case earlier.
The buyer will pay only for the carpet area (area within walls). The builder cannot charge for the super built-up area, as is the practice at present.
RERA ensures publication on their websites information relating to profile and track record of promoters, details of litigations, advertisement and prospectus issued about the project, details of apartments, plots and garages, registered agents and consultants, development plan, financial details of the promoters, status of approvals and projects to provide decisions by buyers.
Under RERA, Builders cannot charge for the area outside the walls– The buyer will have to pay only for the carpet area. The builder cannot charge for the super built-up area, as is the practice at present, where home buyers get 900-1,000 sq. ft. carpet area if you book a 1,300 sq. ft. house (the rest is balconies and common spaces). The law under RERA for home buyers is expected to stop this practice.
Builders are responsible for any defect in the house- RERA for home buyers says, the builder will have to provide for any structural defect in the building for five years. However, the law doesn’t clarify the structural defects between builders and home buyers. RERA also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter.
Builders cannot use your money to make someone else’s house- The developer will have to transfer 70 percent money received from home buyers to an escrow account. This money will be withdrawn as per the stages of construction, approved by engineers and chartered accountants of builders. As a result, developers wouldn’t be able to use the money raised from one project to be used on another project.
Quick redressal of grievance- Under RERA, regulatory bodies and appellate tribunals have to be set up in each state to solve builder-buyer disputes within 120 days. Also, promoters will not be allowed to change a project’s design without buyers’ consent. Promoters must have the consent of two-thirds of the buyers in a project before making any change in the number of units or other structural changes.
Thus, RERA provides a unified legal regime for the purchase of houses, apartments or flats by bringing in better accountability and transparency and seeks to standardize the practice across the country. It ensures the real estate transactions are fairer and more equitable between the buyer and the sellers of the property unlike the ones happening till recent pasts, lopsided and in favor of builders.