Pradhan Sharma a 34 year old from Noida spent his life saving of 15 lakhs to book a flat that he dreamt of living. Not only his life’s saving but he borrowed lakhs from friends and families to secure this flat in Noida. He is still paying interest for the home project which is running from last six years and yet not completed. This is not the only story of Pradhan, but of all those lakhs of home buyers in our country whose life’s dream is to get a Chath (Home) for their family.
This Real Estate market which is expected to cross US $180 billion by 2020 is the second largest employer in India. The consumer (home buyer) who were supposed to be king of this huge market are played at the ends of builders and the option left for them is to wait, wait & wait…
To regulate such big industry, to boost the investment in real estate and to protect the rights of the home buyers Central government came with the RERA. It was enacted on 1st May 2016 and is the FIRST REAL ESTATE REGULATOR of Indian real estate industry. RERA requires all states within 6 months from enactment (1st may 2016) to form their respective State RERA Acts and corresponding provisions that will govern that STATE RERA ACT.
Provisions Related to Builder in RERA Act.
- It is applicable for all commercial and residential real estate where land is more than 500 sq. mt. or more than 8 apartment.
- All such above builders have to compulsorily register their new and ongoing projects before launch of project.
- Any default on registration will attract 10% penalty or three year imprisonment to builders.
- 70% of the money collected from buyer to be deposited in separate bank account to meet cost of project.
- Builders to quote prices based on carpet area (area within walls) and not on super built area. Carpet area is clearly defined in act to include spaces like kitchen and toilets.
- Builder to repair any structural defect increased to 5 years (defect liability period) compared to previous 2 year .
RERA does not impose only strict provision like above on builder but do protect them also. Like it imposes penalty on allottee for nonpayment of due amount on time.
Now let’s check the most important provision for home buyers which will safeguard the interest of HOME BUYERS:
Provision To Safeguard The Interest Of Home Buyers
- Buyers have right to withdraw from project if the builders don’t deliver the property on time.
- Information to buyers for any minor alteration or addition.
- Consent of two third of buyers about any alteration or modification.
- If buyer opts to withdraw, they will be compensated for full amount paid by them along with interest.
- If buyer didn’t opt for withdraw then interest on amount will be compensated for every month.
- Builder to provide above money to buyer on his/her request. Complaint or case is not mandatory. If builder are not voluntarily compensating on buyer request then buyer can file a complaint in respective state RERA where property is located.
No lawyer is required to represent your case. YOU yourself can represent the case in RERA Tribunal or can hire a Chartered accountant or Cost accountant or Companies secretary in the court.
Because of such stringent provisions RERA has impacted the real estate industry in a big way. According to Knight Frank report, new launches was down by 41% in 2017. The fall was worst in NCR & Ahmedabad with 73% & 79% respectively.
It is anticipated that prices will rises as builders will add up the interest for the blockage of 70% of their funds. Also prices will rise on account of increase in defect liability in act.
You may be surprised to know that Maharashtra RERA has got 1800 compliant till Feb 2018, out of which about 900 have been heard.
This is the start only and it has a long way to go.
RERA with its underlying hindrances has come as a hope for the Indian having a whole life dream of buying a home and hope their money is not washed out by the hands of Builders.
To understand RERA in detail, you might be interested in the following book, to directly buy from amazon click below:
Hope you like this information, if you want to read more such content do let us know. Also, if you have any query related to RERA, mention it in the comment section.