The countdown for one of the most significant real estate laws − Real Estate (Regulation & Development) Act, 2016 (RERA) has finally ended. A robust move to safeguard home buyers from unscrupulous developers, the law came into force on May 1, 2017. It holds that every state and Union Territory is required to have its own regulator and set of rules to govern the functioning of the regulator.
The new law has made it mandatory for the builders to register with the Real Estate Regulatory Authority (RERA) before launching or even advertising their project. The developers are also required to furnish details of their financial statements, legal title deed and supporting documents after registering the project. It has also made them accountable for any structural defect in the building for five years.
Though the developers and homebuyers are skeptical about the efficiency of RERA, it secures great hope for the real estate laws. RERA is being touted as the law that will bring in the much-needed transparency and fair play in the industry. It is likely to expedite the completion of construction projects, and keep a check on the malpractices by developers. The demand in the realty sector is expected to shoot up as an aftermath of RERA. It will help in purging the stagnancy due to the unsold inventories, piling up since demonetization.
It has been observed that delays in the delivery of projects happen to be one of the most common issues faced by the buyers. Imposing penalties on errant builders, RERA will put an end to this major concerning issue. Also, it will exempt the buyers from paying the inordinate charges levied by builders.
The current practice of charging for the super built-up area, where you get 900-1,000 sq ft carpet area if you book a 1,300 sq ft house (the rest is balconies and common spaces), is eliminated by it. The new law holds that the developers need to pay an interest rate of 2 per cent points above State Bank of India’s (SBI) lending rate to the homebuyers. It will further improvise all the major real estate laws and propagate transparency and growth in realty industry.
Certainly, the potential efficacy of RERA makes it one of the landmark real estate laws and much-needed change in the sector.