It is expected that by the year 2020, the real estate market in India will be valued at about USD 180 billion. Despite this huge valuation, real estate has been one of the most unregulated markets in the country. The ultimate consumer – the average home buyer – is often at the mercy of the promoter, the realtor, or even unscrupulous middle men. Ignorance, lack of adequate safeguards, and legal options often lead to frauds, delays, and substandard constructions and the price for all of these are paid by the common man who aspires to own a house. Black money transactions galore as real estate also started to become a hotbed of illegal deals.
What Is RERA?
The Real Estate (Regulation and Development) Act 2016, was passed by both the houses of the Indian parliament in March 2016. The law aims at bringing in transparency into the real estate sector and ensuring accountability of the builders. The RERA came into effect yesterday, 1 May, 2017. It is a model law – this means that while the union legislature has passed the guidelines for the law to be drafted, it is up to the states to draw up their own laws and pass them. When both the houses of the parliament had approved of the RERA guidelines, all states had been given over 12 months to draft their laws and notify them. As of yesterday, however, only 13 states and Union Territories of India have notified new real estate laws in accordance with the RERA.
RERA Guidelines –
- All builders/promoters will be required to register each project they undertake with the RERA. This registration number will be quoted in all advertisements and promotions for the project. This number will also allow the buyer to crosscheck the details of the project from the RERA website and ascertain the truth of the builder’s claims.
- The builder will also need to disclose all details of the project including proof of title deed, all approvals and plan sanctions, and the details or contractors, architects and engineers engaged in building the project. Financial statements of the builders and their past records will also need to be furnished.
- One of the greatest challenges faced by buyers is delay due to diversion of funds from existing to new projects by builders. The builders and promoters will now have to maintain a separate fund for each project initiated and retain 70 percent of the money received from the buyers for investment into that very project.
- The builder will have to assure the home buyer of the quality of construction and undertake protection of the building against any structural damage for 5 years from the date of construction.
- The builder or promoter has to compensate the buyer for delay in construction and availability of property for possession. If the buyer wishes to withdraw from the sale agreement, the builder must return the advance amounts with interest.
Real Estate Regulatory Authority
There are over 76,000 companies in the Indian real estate sector. The RERA intends to set up regulatory authorities in each state for redressal of real estate-related disputes. Currently only three states – Maharashtra, Madhya Pradesh, and Rajasthan have complied with the RERA guidelines and set up the regulator’s office. Maharashtra has also set up the website where builders and promoters may register themselves. The remaining states are yet to comply fully but expectations are that once the RERA is implemented, India will be a home buyer’s paradise.