May 1, 2016, since the game-turning RERA Act has become effective, it changed the total scenario of the real estate in India. Previously, the buyer, who was in a vulnerable position, started making the best use of the RERA rules for claiming their rights over the return they are entitled to against the investment in real estate they have made.
The introduction of the RERA Act 2016 not only empowered the buyers but also shaped the total regulation of the activities of the builders regarding the real estate property. This was not easy indeed, it faced several wears and tears.
The immediate impact of RERA implementation in brief
On completion of the first year, in an article published by the Economic Times, it pointed out that several states failed to understand what is RERA Act actually saying and got confused regarding the ‘ongoing project’, and kept it outside the ambit of RERA. The builders took advantage of it, and quickly finished the work and delivered a substandard quality of construction work.
Moreover, not all the states agreed to comply with the rules of RERA registration and even those who agreed to it, delayed to prepare the RERA website of the state.
However, it showed promising progress in one year which included being strict with the delinquent builders. RERA Haryana had penalized a developer with an amount of Rs. 10 lakh as he had slipped the RERA registration of one of his ongoing projects. On the other hand, Maha RERA penalized a well-known realty developer for not publishing the RERA website Maharashtra in the advertisement of the project by the builder, though it was one of the RERA registered projects in Mumbai.
In the second year of RERA, the Supreme Court, as well as the regulatory authorities, started compelling the states for setting up the RERA official website. This year, among the states, left being the forerunner in the implementation of RERA India, geared up for it. Among them, AP RERA has worked with excellence – it registered 328 projects and set up a fully functional RERA official website.
Guide for First Time Home Buyer
After the hindrances faced and solving them, RERA now stands quite a define set of regulation, for the benefit of any home buyer, especially the first time home buyer must keep in mind to tick the checklist we have prepared here:
Do not get fooled By An Advertisement:
Advertisements are always to lure customers to invest, and when it involves a huge investment like in real estate or buying a new house, ignore the excellent picture and features mentioned for few seconds and look for the RERA registration number.
Post the implementation of the RERA Act 2017, no project can be advertised for unless it has undergone a RERA registration process.
Moreover, if the builder or the RERA agents try to manipulate by saying that it is under process, or it is a secret of their business, simply drop all your plans to home buying from this builder.
RERA number or registration number is public information which the RERA Act 2017, and who cannot produce the number, consider that they are not RERA registered projects.
Moreover, if they promise anything in their advertisement, they have to provide it. For example, if a rooftop swimming pool is promised in the advertisement, and later on the builder or RERA agent says that it is what they have planned for, but is not sure about, such incidents shall be considered as a violation of RERA rules.
You can also check the details of the project on the RERA website, anything mentioned over there, the buyers are entitled to get those.
Pay Attention to the Carpet Area:
The definition of carpet area is – ‘net usable floor area of a property, not inclusive of the external walls, balcony, and open terrace area. However, it includes the internal partition walls’.
Put some effort to understand the difference between carpet area and built-up area and also understand the concept of a super built-up area.
As per the RERA Act, it is mandatory for the builders to sell any property based on the carpet area, not the built-up area or super built-up area. Therefore, it must be made clear to the buyer the size of the carpet area following the definition mentioned above. The size of all the areas, other than the carpet area – balcony, built-up area and super built areas for the apartments at advantageous positions or corner apartments.
In your agreement, all these sizes must be mentioned in clear words free from any ambiguity.
Leave Behind Savings/Current Account, Escrow is the New thing:
As per the new RERA Act, it is mandatory to deposit 70% of the total funds that must be deposited in an account. That account must be an escrow account.
The escrow account is basically under the realm of a bank or government authorized financial institution, acting as a third party.
It directly hits at the biggest issue faced by the home buyers of possession delay and one of the biggest reasons for this is the usage of a collection of one project into another. Now, when the amount is deposited in an escrow account, each penny is to be used only for the concerned project.
For any withdrawal from this account, consent of the engineer involved in the project work, the architect and chartered accountant keeping an account of the expenses of the project.
Do not let the Advance Payment to Stress You:
According to the rules of RERA India, the advance payment must not be more than 10% of the total cost of the area (flat/property/house) one is investing in the RERA project.
Even if the builder or RERA agent tries to convince you to pay more than that, with lucrative promises like it will help them to finish the project in super-fast time, you can refuse to pay anything extra.
Success Story Of RERA
When you are investing your hard-earned money, it is natural to inquire about the progress of the new RERA rules since it has been implemented.
To mention the success stories of the RERA Act all over India, the contribution of RERA Maharashtra is praiseworthy. As per the reports published in the first of 2019, among the 43.208 RERA registered projects, almost half, i.e. 21,742 are registered with Maha RERA.
For solving disputes, UP RERA took an active role – Among the 20,975 settled case, UP has the highest number of cases with 5.989 settled cases.
As far now, 29 states and Union Territories have set up the RERA authority, among with nine are under the temporary authority and yet to settle the final set of RERA rules.
While RERA Maharashtra being the most active state in the implementation of RERA rules, RERA Gujarat and RERA Telangana have shown remarkable performance while being under interim authorities.
As there are still miles to go, and with the outstanding co-operation of the state RERA with the centre is aiming towards a well regulated real estate market in India.
