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• All You Need to Know About RERA Act

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The Real Estate (Regulation and Development) Act,
2016 (RERA) has become effective in the country
from May 1, 2017. It will act as the regulator of
the real estate sector. Every state and Union
Territory (UT) will have its own Regulator
Authority (RA) that will be responsible for
framing rules and regulations as per the Act.
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Real estate prices did not go down as expected.
Builders have not been able to bring the rack
rate down, except a few freebies and discounts to
customers, due to a variety of reasons, such as,
demonetisation, low demand, massive unsold
inventory to name a few.

Impact of RERA
Before RERA, the risk of delays, quality, title,
and changes were borne by the customer. These
will now be borne by the developer and there will
be a premium that the flat purchasers will have
to pay for transferring this risk to the
developer. There is no room for developers to
absorb these costs and so they may be transferred
on to the customers by way of price increase,
says MD of Gera Developments and VP Credai - Pune
Metro, Rohit Gera.
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Up till now, the biggest problem that homebuyers
have faced is delayed delivery of real estate
projects. Almost all projects launched between
2010 and 2013 have defaulted in handing over
possession within the time frame. This is mainly
because of funds being diverted to new projects
by developers and not using them to complete
existing, ongoing projects.
Impact of RERA
RERA will require promoters to maintain a
separate bank account for each and every project,
wherein they will have to maintain 70 percent of
the buyer money. This fund can only be used as
land cost and for construction purposes. The
developers must furnish all additional
information about the ongoing projects for
benefit of the buyers, apart from depositing 70
percent of the unused funds in separate bank
accounts for each project. This will ensure
completion of all projects.
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For ongoing projects, developers must make public
the original sanctioned plans and also the
changes made later. In addition to this, they may
also declare the money used, money collected from
allottees, original completion timeline and also
the time period within which the developer must
complete the project. This will be certified by
an Engineer/Architect/practicing Chartered
Accountant.
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The role of every regulatory authority in the
state is to register and regulate the projects
and also the agents registered under the RERA
Act. There will be a website for public viewing
of all projects that have been registered.
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Projects quality of concern has been a matter to
consider for numerous developers. RERA in fact
provides protection against this for up to five
years after possession has been granted. It is
now the duty of the promoter to rectify any
defect in construction within 30 days, if
reported within this span of five years. The
defects include any workmanship and structural
defects, quality of provision of services and any
other obligation as per the agreement.

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Until the promoter registers the projects under
RERA, he is not permitted to market, advertise,
book, sell, invite persons for purchase, and
offer for sale any of his projects or part of it.
Moreover, every advertisement must have the RERA
registration number.
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Registrations of projects have become mighty
important as a result of RERA implementation. All
homebuyers must always go for projects registered
with the RA. Once a particular state has
finalised its RA, builders are required to
register their projects by providing all
information and this would include copy of legal
title deed, financial statements and other such
documents. The builders will be provided with a
tower-wise registration number.
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Delayed delivery is not an option anymore as in
case the promoter fails to handover possession of
the property within the promised timeframe, he
has to return the total amount along with
interest as per the rate mentioned in the sale
agreement. In case the buyer refuses to withdraw
from the project, the developer must pay him/her
interest for every month till he hands over
possession.
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Once the builder has registered his projects
under RA, he will be provided a login ID and
password by which he can create a page on the RA
website. He has to upload all project-related
information on this website. The information will
be updated quarterly that will have a list of
number and types of plots and apartments booked.
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As per the RERA rules, a promoter will not be
allowed to accept more than 10 percent of the
property cost as application fee or advance
payment. He has to first enter into a registered
agreement for sale.
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