The Real Estate (Regulation and Development) Act 2016 (RERA) changes the game for both real-estate buyers and sellers. Thanks to RERA’s stipulations, buyers can now say goodbye to inordinate delays and shoddy constructions, while sellers can look forward to an increased demand for property that can help them clear their unsold inventories.
These are the main benefits you can expect from RERA.
Builders can’t delay projects
One of the banes of real estate is delay: several buyers in places such as Noida cannot access their properties even though they’ve paid the full amount. RERA seeks to eliminate this problem by demanding that builders compensate buyers – builders must pay an interest rate of two percentage points above the State Bank of India’s lending rate to buyers for any delay. Penalties for failing to comply involve up to three years in prison.
Builders can’t charge for the area outside the walls
At present, buyers pay for the square footage in their apartments and for the common spaces, such as balconies. RERA now allows builders to charge for only the carpet area (i.e. area within the apartment’s walls).
Builders are responsible
for any structural defects!
If any structural defect is found in the building within five years, RERA makes the builder responsible for it. If any defect related to workmanship is brought to the notice of a promoter within five years from the date of handing over possession, the promoter must rectify it.
Builders can’t use your money to make someone else’s house
According to RERA, developers must transfer 70 per cent of the money they receive for construction to an escrow account. Money is then withdrawn according to the stages of construction, and must be approved by engineers and chartered accountants. Developer thus cannot use the money raised for one project for another.
Consent and quick redressal of grievances
Under RERA, regulatory bodies and appellate tribunals have to be set up in each state to solve builder-buyer disputes within 120 days. Moreover, promoters won’t be able to change a project’s design without buyers’ consent – they must have consent from two-thirds of the buyers in a project before they can make any change to the number of units or any other structural change.