Real Estate Will Now Prosper On Transparency
Waiting to get your property’s possession? Your dream home project gone on hold?
Real estate is an important and growing market in India. However instances of delayed possessions, shoddy construction, escalated costs without good reasons, trusting the realtor are fairly common. It is times like these that one can’t help but wonder if there is any regulating body that can govern the interest of both parties.
The good news is that there are in fact government rules and regulations that can help people to get transparency and clarity from realtors; one such newly formed body is RERA (Real Estate Regulatory Authority). The Real Estate Agency of India passed the Real Estate Regulatory Authority (RERA) Act in March 2016 which is being implemented since 17th April onwards. The main purpose of this body is to protect home buyers and investors, create a trusting relation between buyer and builder and boost investments in the real estate industry in an organized manner. Regulatory Authorities will be set up in every state alongside appellate tribunals for dispute resolution.
With hundreds of complaints being lodged against builders and realtors, this comes as a sigh of relief to the exploited buyers. They can finally raise their voice and seek real help. RERAs will look after both residential and commercial projects and ensure their timely completion and handover.
It is no news that the present real estate industry scenario is quite chaotic and there are many facets where corruption is rampant. Thus the policies of RERA are an effort to regulate all such aspects to bring about a positive change in the industry.
To start with it is paramount to reestablish a sense of conviction in the buyer-seller relationship. Thus all projects (new and ongoing) will be registered with regulatory authority before selling. Any project spread in over 500 sq mts or has more than 8 apartments has to necessarily register with RERA. The Act dictates builders to deposit 70 per cent of the total project funds in an escrow account through cheques and thus eliminate any chance of unaccounted money from being invested. This also means that the developers will not be able to use this fund in any other project which usually ends up delaying in completion of the project and giving possessions to customers.
Another very important aspect of this Act is that builders will have to quote prices based on carpet area unlike super built-up area which is a widespread practice. Thus it means you now only pay for useable areas like kitchen and toilets. Developers can not advertise and sell homes till they have obtained all approvals from local authorities and are registered with RERA. There shall be insurance of land title. As per the Act it becomes compulsory for builders to share the entire project related information with State Real Estate Regulatory Authority and in turn the consumers like approvals, promoter details, schedule for completion, project plan, layout, land title status, sub contractors to the project and so on.
What's more the realtor has no rights to change the plans once they are sold without prior written consent from 2/3 rd buyers. Thus empowering the buyer with information they need.
Presently even if the project gets delayed the realtor faces no hassle. However as per the new rules if the project gets delayed the developer is liable to pay the same penal interest rate as the buyer does.
Within one year of taking possession the buyer can write to the builder for any grievance. Developer shall be responsible for all structural defects for all time and defect liability period shall be 5 years from date of completion of construction for other defects. Monetary penalties and imprisonment are also included for defaulters. Grievance will be resolved within 60 days. Registration of Real Estate Agents too made compulsory.
Proportionate rights in land shall be determined by RERA for each unit/flat at the time of registration of project with the regulator and developer shall be responsible to transfer land rights by way of separate registered deed in favour of prospective buyer. All common areas shall have to be transferred to the resident welfare society ( RWA) by a registered deed and maintenance of the project shall have to be transferred to RWA by the promoter. The Promoter shall not transfer or assign his majority rights ad liabilities in respect of a Project to a third party without obtaining prior written consent from ⅔ allottees.
The most important thing to remember here is that all these rules will make possible timely delivery of projects and create more opportunities for buyers and developers. This will also help us achieve the ‘Housing for all’ target.