The pro­tec­tive um­brella of RERA will trans­form re­alty

The 14 spokes of RERA have helped re­alty be­come a sys­tem­atic sec­tor

Hindustan Times (Chandigarh) - Estates - - ESTATES - Anuj Puri let­ters@hin­dus­tan­times.com The au­thor is Chair­man – ANAROCK Prop­erty Con­sul­tants

The In­dian real es­tate in­dus­try, par­tic­u­larly the res­i­den­tial sec­tor, was in the past cor­rectly char­ac­ter­ized as be­ing un­reg­u­lated and un­or­ga­nized with un­rea­son­able project de­lays and poor qual­ity of construction be­ing de­fin­i­tive as­pects.

The ar­rival of the Real Es­tate Reg­u­la­tory Act(RERA) in March 2016 brought in a par­a­digm shift in the sec­tor and meta­mor­phosed it into a more ma­ture, sys­tem­atic and reg­u­lated one. RERA came into force on May 1, 2017, and is meant to be a home­buyer-friendly regime which will ad­dress their griev­ances and pro­mote trans­parency, ef­fi­ciency, fi­nan­cial dis­ci­pline and ac­count­abil­ity in the sec­tor.

In­deed, buy­ing a home is not only the most cher­ished dream for many In­di­ans but also one of the big­gest long-term fi­nan­cial com­mit­ment in the buy­ers’ lifetime. Con­sid­er­ing this, there are 14 im­por­tant guide­lines in­cor­po­rated in the RERA um­brella to pre­vent un­scrupu­lous play­ers from rain­ing on con­sumers’ home-buy­ing plans:

1. En­forc­ing timely de­liv­ery of projects

In case of project de­lays, buy­ers have the right to - (i) Seek with­drawal of book­ing (the de­vel­oper is li­able to re­fund the en­tire amount along with in­ter­est) (ii) Go ahead with the project (with the con­di­tion that de­vel­oper will pay in­ter­est for ev­ery month of de­lay un­til the prop­erty is ready for pos­ses­sion). The max­i­mum time for re­fund­ing the buyer’s in­vest­ment is within 45 days of it be­com­ing due.

2. Fa­cil­ity to check RERA reg­is­tra­tion num­ber

All builders have to manda­to­rily reg­is­ter their projects un­der RERA with the re­spec­tive state reg­u­la­tory au­thor­ity and ob­tain a reg­is­tra­tion num­ber for ev­ery project. With­out RERA reg­is­tra­tion, de­vel­op­ers are not al­lowed to sell the project. The project de­tails, construction progress, com­mence­ment/oc­cu­pa­tion and other cer­tifi­cates, sales de­tails, etc. must be up­dated on the sin­gle-point in­for­ma­tion win­dow i.e. RERA por­tal, at reg­u­lar in­ter­vals.

3. Fi­nan­cial safety via an es­crow ac­count

Home­buy­ers’ in­vest­ments can be con­sid­ered safe, as RERA obliges de­vel­op­ers to de­posit at least 70% of the buy­ers’ money re­ceived for a par­tic­u­lar project into an es­crow ac­count. This pre­vents the de­vel­op­ers from ‘rolling’ these funds into other projects. The rolling of funds was a ma­jor rea­son for project de­lays in the past.

4. Abil­ity to ver­ify the builder’s track record

Buy­ers can now opt for prop­er­ties only from re­puted de­vel­op­ers who are com­ply­ing with RERA norms and have a good track record and fi­nan­cial sta­bil­ity, which can be ver­i­fied by buy­ers.

5. Trans­parency in ad­ver­tise­ment and mar­ket­ing col­lat­er­als

De­vel­op­ers can now pro­mote a project only af­ter reg­is­ter­ing it with RERA. The unique RERA reg­is­tra­tion num­ber has to be pub­lished with ev­ery ad­ver­tise­ment/ brochure, or in any kind of project pro­mo­tion at all.

6. Clar­ity on car­pet area

The hith­erto con­ven­tional prac­tice of de­vel­op­ers charg­ing home­buy­ers on the ba­sis of the su­per built-up area no longer works. Un­der RERA, the quoted price has to be manda­to­rily based on the car­pet area of the prop­erty. What you see is what you get (and buy).

7. Strict norms on build­ing changes

Around 2/3rd of the buy­ers’ con­sent in a par­tic­u­lar project is nec­es­sary in case the de­vel­oper in­tends to mod­ify the build­ing or lay­out plans/spec­i­fi­ca­tions/li­a­bil­i­ties in the project.

8. Fa­cil­ity to check pay­ment plans

Home­buy­ers can do due dili­gence be­fore opt­ing for a par­tic­u­lar pay­ment plan, a va­ri­ety of which de­vel­op­ers now of­fer - in­clud­ing flexi-pay­ment, down­pay­ment, pos­ses­sion-linked and construction- linked plans.

9. Book­ing amount can­not ex­ceed 10%

De­vel­op­ers can only take 10% of the total prop­erty cost as a book­ing amount while the sale agree­ment is drafted at later stages. RERA pro­hibits de­vel­op­ers to ac­cept more than this. If guilty of charg­ing more than 10%, the de­vel­oper po­ten­tially in­vites a penalty of im­pris­on­ment of up to 3 years.

10. Bro­kers must be reg­is­tered un­der RERA, too

As ser­vice providers to real es­tate con­sumers, prop­erty bro­kers are also li­able for all de­liv­er­ables com­mit­ted by the de­vel­op­ers they rep­re­sent. Hence, they must reg­is­ter them­selves with their re­spec­tive state Reg­u­la­tory Au­thor­i­ties.

11. At long last, a re­li­able re­dres­sal mech­a­nism

RERA pro­vides a strong re­dres­sal mech­a­nism to con­sumers by im­pos­ing a penalty on de­vel­op­ers/bro­kers for any breach of obli­ga­tion. Home­buy­ers can file com­plaints against de­vel­op­ers/ bro­kers which will manda­to­rily be re­solved in a span of 60 days from the date of the com­plaint.

12. Struc­tural de­fects must be addressed

In case of is­sues within the build­ing or apart­ment, such as in­ef­fi­cient plumb­ing, vis­i­ble cracks, etc. in the ini­tial five years af­ter pos­ses­sion, de­vel­op­ers are li­able to rec­tify the de­fect in less than 30 days or else give com­pen­sa­tion to the buyer.

13. Avail­abil­ity of land ti­tle doc­u­ments

These vi­tally im­por­tant doc­u­ments were, more of­ten than not, in­ac­ces­si­ble to buy­ers be­fore RERA. Now, they can scru­ti­nize doc­u­ments re­lated to a project’s land ti­tle own­er­ship on the RERA web­site.

14. Good­bye to soft/pre­launches

RERA has put a com­plete halt to soft launches, pre-launches and any other in­ter­pre­ta­tions of sell­ing some­thing which doesn’t ex­ist as yet. As a re­sult, spec­u­la­tors have now been pushed out and the mar­ket has turned ex­tremely buyer-friendly.

While many states are still in the process of no­ti­fy­ing their RERA rules, there has been con­tin­u­ous fret­ting about the di­lu­tion of the rules re­cently no­ti­fied by many states. There are mul­ti­ple changes made by dif­fer­ent states in the RERA pro­posed ini­tially by Cen­tral Gov­ern­ment. Di­lu­tion in on­go­ing projects’ def­i­ni­tions has lefta huge num­berof projects out of the RERA am­bit and is un­der­stand­ably a ma­jor con­cern for ex­ist­ing buy­ers. To keep the spirit of RERA alive, the Gov­ern­ment should try to keep RERA rules aligned and ef­fec­tive across all the states, while bal­anc­ing the in­ter­ests of both buy­ers and de­vel­op­ers.

That said, wher­ever it is in force in letter and spirit, RERA is a boon to the home buy­ers. While the progress of R ERA im­ple­men­ta­tion across states, bar­ring a few, is go­ing at a slower pace than pre­dicted, it is def­i­nitely re­gain­ing the trust of home­buy­ers by con­sol­i­dat­ing the sec­tor and pluck­ing out un­scrupu­lous real es­tate play­ers.

MINT/FILE

The ar­rival of the Real Es­tate Reg­u­la­tory Act (RERA) in March 2016 brought in a par­a­digm shift in the sec­tor and meta­mor­phosed it into a more ma­ture, sys­tem­atic and reg­u­lated one

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