According to RERA each state and Union Territory shall mandatory have its own regulator and there will be set of rules defined by the regulator relying which the transactions of real estate market will be done. While many states are still to form their regulator, many have formed and will start functioning as per date.
In order to get a better understanding of the Act, these are some of the salient features:
- This Act makes it mandatory for all the commercial and residential projects, which are more than 500 square meters or eight apartments, to be registered with RERA before launching a project i.e. booking, selling or offering apartments for sale. Promoters will have to submit all the details of the project including the layout, cost, sale price, timeline of the project to be completed, the revenue to be collected from buyers, details of utilisation of funds, etc.
- Those projects which have already been launched and have not received the certificate of completion on the date of the commencement of this Act, are given a grace period of 3 months to register themselves. Failure of doing so would invite a maximum imprisonment of 3 years with a penalty of 10% of the total project price.
- 70% of the amount collected from the buyers will have to be put into separate account and can only be used for the construction of projects. The promoter for this purpose has to get his account audited every 6 months by a Chartered Accountant, after which a statement of accounts duly signed by the Chartered Accountant has to be submitted to RERA, thus showing that the amount collected for a particular project has been used for the same purpose and the withdrawals from that account are in compliance with the proportion to the percentage of completion of the project.
- According to the Act, while selling, only units of carpet area have to be sold which means the net usable floor area (the area within the walls the apartment). This excludes the balcony area or the veranda area or any area covered by external walls.
- If the promoter fails to complete the project within the prescribed deadline, then one has to return the entire investment amount to the buyer along with pre agreed interest rate based on the contract given by RERA. However, due to some reason, if the buyers choose not to take the money back, then the promoter has to pay interest amount every month till the apartment is handed over to the buyer.
- To add further security to the investments, RERA has made it mandatory that developers cannot ask for more than 10% of the property cost from the buyer as an advance payment i.e. the booking amount before signing the actual agreement.
- For advertisement, projects cannot be advertised till the registration has been done with RERA. After obtaining the registration number, no matter wherever the projects are advertised it is mandatory for each and every developer to mention the website of RERA and also the registration number through which buyers can also refer. With the help of this number, the entire details of the project including the plot, price, etc. will be given.
The aim of this Act is to safeguard the interests of home buyers in the primary real estate market. Because of the un-affordable prices charged by builders, most of the middle class people in our country are not able to afford a proper house to stay in. RERA has encouraged a lot of common public to invest in real estate market. Because of the monopoly of builders and developers, only rich investors could buy a number of properties and hence this facilitated inequality. These clauses of maintaining a separate account of investors’ money will also curb the issue of black money which is the highest in the real estate sector of our country. Yes, it is a known fact that projects get delayed by 1 year or 2 years and RERA has worked on an excellent basis to provide a solution for this as well. This will encourage the builders to complete their projects on time. After a long time common public in our country will invest in real estate and due to these rules and regulation implemented, stabilisation of prices will also be ensured.