Real Estate (Regulation and Development) Act, 2016 (RERA) came into effect on May 1, 2017, ending the long wait of regulating real estate markets which have faced turbulence in the near past. From variable prices to delayed delivery issues, India was in dire need of the act. Seems like the country is embracing what is needful under the Modi Raj. After GST, Real Estate act has become the talk of the town, as far as adoption of unprecedented transformational policies or acts are concerned.
Being a home buyer, here are the major takeaways from the RERA implementation. One must be abreast of the developments in the act so that you become smart at buying your next home or that farmhouse you have been eyeing at.
Here are the key takeaways of the RERA act passed on May 1, 2017.
Booking amount
Without inking an agreement of sale, the developer cannot demand 10% amount of the Cost of Property (COP). Under RERA, the developer cannot ask for more than 10 per cent of the booking amount as an advance without making an agreement for sale.
Ongoing Projects
For all the ongoing projects, the developers have to determine a perfect deadline and duration of the project. The developers of ongoing projects must update it’s buyers about the duration of the project.
Registration and advertisement
No project can be advertised if its not registered. Every state will set up it’s own regulatory authority which will monitor the advertisement and registration proceedings of the project. Any apartment or building without registering the project with the RERA authority cannot be advertised starting May 1.
Online Updation
Post the project has been registered, the builder must update their website with the relevant project details on authority’s website. The developers will also be required to update about the current status of the project, so that the buyer is aware about the development process.
Delayed delivery Penalty
If the developer delivers possession alter than the promised date, charges and penalties will be applicable on the developer. If he is not in a position to pay penalties, it has to pay the total amount given by the customer, in addition to interest. The interest will be pegged at 2% higher than the SBI Marginal Cost of Lending Rate.
Amount Utilization
70% of the amount collected from buyers for a project must be maintained in a separate bank account. This amount can only be used for construction of that project. The state government, however, can alter this amount to less than 70%.
Project Quality
If any property is found with poor or degraded quality, the onus to rectify it falls on the developer who will be allotted a time frame of 5 years.
Until date, only Madhya Pradesh has appointed a regulatory authority. Kerala, Maharashtra, Punjab, Rajasthan, Mizoram, Haryana, NCT of Delhi, Andaman & Nicobar Islands and Chandigarh have an interim regulatory authority in place.
States in advanced stage of appointing a regulatory authority are Odisha, Bihar, Jharkhand, Assam, Tamil Nadu, Andhra Pradesh, Telangana, Tripura, Dadra and Nagar Haveli Daman and Diu, Andaman and Nicobar Islands and Lakshadweep.
Rajasthan is among the few states which have prepared a draft rules and is progressive at the right pace to adopt the act. Whether the state adopts the act in its entirety or dilutes it accordingly remains to be seen.
Well, if you are hunting for a property next time, keep these points mind in mind. Let anybody not fool you!
