A RE(RA) of hope
The much-touted Real Estate (Regulation and Development) Act or RERA came into force on May 1, but many states are yet to set up their own real estate regulatory authorities and appellate tribunals to address buyers’ grievances, as mandated. Only 13 out of the 32 states and Union territories have established their own real estate regulator so far. Having said that, Delhi and Maharashtra, two of the largest markets for real estate in India, have a regulator in place now. The others may form RERA bodies shortly.
How will this help the buyer? Until demonetisation dented prices in many cities, as black money supply to the sector dried up, many projects remained out of bounds for the middle class buyer. Moreover, the segment was characterised by inordinate delays in getting possession of homes, absence of the promised amenities, and developers tweaking norms to add illegal structures to projects. Home buyers could seldom get their complaints redressed; besides legal redress is an expensive and time-consuming process.
RERA promises transparency in the home-buying process and greater accountability on the part of developers. All projects on 500 sq. m. or more of land and having eight apartment blocks or more come under the purview of the Act. Developers will now have to park 70 per cent of the money they collect from buyers for a project in a separate escrow account, so that it can be tracked to ensure it is used only for the said venture. Also, the developer can’t make changes to the original project plan without the consent of two-thirds of home buyers. Buyers, too, need to register homes with the same authority. This should have a positive ruboff on the real estate sector.