Everyone dreams of buying a home. But everybody can't afford a house, yet property prices are still very high compared to income. In the past, no standard rules existed in real estate transactions. The Telangana government has implemented RERA to safeguard and protect the interests of home buyers and ensure that developers do not misuse them.
What is RERA?
RERA was implemented in May 2017 to promote and expand the property market. Also, for safeguarding the interests of house buyers, putting both buyer and seller movement in a centralized and structured regulatory framework. RERA is set up to reduce construction delays, malpractice, irregularities in norms and increase transparency and accountability for both builders and buyers.
Many Indian states have been approved in compliance with the Act to create their regulatory practices. Around 35,000 projects were enrolled under the real estate regulation act at the end of December 2018, and the number was increasing. The most RERA compliant states are Maharashtra and Gujarat and other states having interim RERA are expected to follow the act. Let's see the highlights of the law which put the sector on an upward course, bringing about standardization never before in India.
Main Features of RERA Act
- All commercial and residential properties in Hyderabad and other states in India (except Jammu and Kashmir) are subject to RERA and are compulsory. All projects have to be registered in RERA whether at the beginning or construction phase (if the area is more than 500 sq. meters or eight apartments).
- Any improvements in the property's layout or project must be made with the approval of the allottees and authorities (two-thirds of them).
- The law gives clear guidance about the area of the carpet area as it is a useful area within the walls. The buyer has to pay only for the carpet area and not for the super built-up area.
- 70% of the funds collected from buyers to be retained in a separate bank account and used for project development.
- The date of completion of the project must be clearly stated in the contract, and the project shall be completed with strict steps.
- All project information, such as financial statements, registration copies, project prospectus, plan of the apartment, among other items, must be made accessible to buyers other than the sale agreement.
- To provide the buyer with the in-depth information on the reputation of the developer and his projects, RERA websites publish lists of the developers and their current projects, including licenses, project litigations, descriptions of FSIs, plot bearings, certifications, and so on.
- In the event of a delay, the buyer and seller will pay the same 2% interest in the SBI loan rate.
- The state is required to set up, within 120 days, a real estate appellate tribunal to resolve disputes between buyers and sellers.
- The builder or developer may not request more than 10 per cent of the total value of the property until signing the final sale agreement as an advance payment/reservation amount.
- If there are malfunctions or defects in the apartment, residents must inform the contractor within one year, who shall be liable to solve problems without charge within five years of ownership.
- Unless the project is registered with RERA at the state or central, the builder can not publish any advertises related to the project. Registration status shall be listed in ads, and project information shall also be available on the RERA website.
- You can visit the Complaint Registration page on your web site if you wish to file complaints under RERA.
The RERA Act main aim is to protect the interest of home purchasers and create a sense of standardization on the real estate market. With the release of this act, developers can not make faults with home buyers. This act promotes the development of real estate in India, which gain confidence in the mind of customers. This act creates a system that solves problems, such as project delays, construction quality, pricing and property value, etc., with greater transparency. The primary purpose of RERA is to encourage transparency, accountability and productivity in the real estate industry.
Benefits of RERA Act
Many buyers are planning to buy a home but are still confused with the term RERA. Look at some of the benefits of RERA to the home buyers in the below points.
- RERA mandates the buyers to pay only for the carpet area rather than the super built-up area. For example: If a buyer has plans to buy a house of 1300 square feet, and the carpet area is 900 square feet, then he has to pay only for carpet area which in turn will save his pocket expenses. Carpet area includes the area covered by the carpet which excludes spaces covered by common areas like elevators, stairs, play area etc.
- Under the RERA rules, the regulatory bodies and appellate tribunals will be set up to address the disputes and grievances arising between builder-buyer within 120 days. This would also ascertain that the builder will not be able to change the project design without the prior consent of at least 1/3rd of the buyers.
- As per the RERA rules, the builders have to transfer 70% of the amount collected from the consumers to an escrow account (The account held by third party when the transaction is in process between builder-buyer) so that the funds are judiciously used in the construction of one project in the planned manner without any diversion.
Regulate Carpet Area
Rug area is the area in which a rug or the floor of the apartment can potentially be used excluding the thickness of the inside walls. Builders have their system or equation before Rera to measure the area of a carpet of a flat/property. Yet RERA has simplified or designed how a builder measures the carpet area. With the introduction of the RERA law on 1 May 2016, A builder will explain and clarify how much carpet area is provided in the building to the buyers. The cost of an Indian property now depends on the carpet area. There is a direct impact of the act on price which a builder charges on the building. The builder uses the below when calculating the property price.
Cost Of Property = Carpet Area x Rate Per Square Fit.
Right to Get Information of the Property
To home buyers, this is one of the main advantages of RERA. All information about the property that you are buying as a homebuyer must be identified. This kind of knowledge could be beneficial in future decision-making for a home buyer. The builder has the right to share all the project information, such as the layout of the building. Building stages, implementation schedule, completion status, etc.
No Delay in Delivery of Projects
In compliance with this new 2016 RERA Act, each developer must indicate a due date for the land. And if the developer cannot finalize the plan until then, they will have to face various penalties. If a contractor cannot give the customer a full refund, and the interest is demanded, the purchaser will have the right to withdraw from the project. And in this situation, he/she has the right to get payment together with interest to continue the project.
No Defect or Fault in Construction of Project
Under this RERA Law, if a buyer has found any fault or flaw in the building, quality of a flat within 5 years of owning a flat, such an error will be remedied within 30 days, at no additional cost, by the developer. If the contractor has been unable to cover the fault, the purchaser shall have the right to receive compensation.
Grievances are Quickly Addressed and Solved
If the buyer dissatisfied with the construction of the apartment, the buyer shall have the right under RERA to take action against the builder in the Appeal Tribunal. Within 60 days of appeal proceedings, the tribunal will resolve your claim. The Court will also explain the reasons for these deficiencies if the issue has not been solved.
Before entering into a sales agreement, a builder can take up to 10% of the cost of the flat as an advance fee or as an application fee. This is one of Rera's main advantages.
Protect From False Promises
If the builder fails to deliver on the project or promises made. The buyer has the right to withdraw from the property, and he is entitled to a full refund and demand for payment of the amount that he paid in advance.
Issuance of Clearances before Selling
Before the introduction of RERA Act builders used to sell a project that was not clear as a result homebuyers face several problems. But now with the RERA, all developers, builders and real estate agents must register themselves with the regulator and report all information about the projects. They can only sell projects after confirmation has been made of the requisite clearance.
The most important problem for homebuyers was the timely delivery of real estate projects. As per the reports, many real estate project started from 2010 to 2013 defaulted mainly on account of a move to the new project by the buyer's fundraised by the buyer. Under the new RERA law, however, the developer must move 70% of the money received from the purchaser to an escrow account. And then the money will be used based on the construction stages, and the engineer and CA should approve it.
In 2016, as RERA act came into force, the price of the property, land and interest rates of home loan are directly influenced. Confidence and transparency have been strengthened in the real estate market due to the implementation of RERA. Real estate investment also increased. All these signals give the sector growth, and increased demand gradually lowers the price and, home loans interest rate. Also, the RERA is not only benefited to homebuyers, but also assist developers and property agents in various ways. RERA Act made both the developers and the purchasers of the real estate sector more professional and safe.
What are the steps to file a complaint under RERA?
Step 1 - To file a complaint with the Authority, the applicant has to go to the official State website, Check the Complaint Registration page to filing the complaint under RERA.
Step 2 - Click the registration button for a complaint. Then you can view complaint form to fill out the grievance information.
Step 3 - Homebuyers should submit their data, including name and address, contact details, and project information when filing a complaint. Supporting documents may also be attached.
Step 4 - Once the form is completed, the complainant has to pay Rs 1,000 for filing the complaint or in case the complaint is filed before the Adjudicating Officer Rs 5,000 has to be paid. For transaction completion, online payment mode is also available.
Benefits of Filing RERA Complaint
- Chances of speedy disposal of complaints.
- A requirement of financial discipline by the promoters.
- Transparent transactions
- No uncertainty in area measurements.
- Promoters are responsible for compensation for delayed projects.
- Adjudicating mechanism to be in place.
To deal with the many problems facing by the buyer to buy a flat in Hyderabad and other states, RERA was introduced by the government. In the real estate sector, it has been established to improve transparency and accountability. A buyer is responsible for ensuring that the regulatory authority has registered the project before acquiring. So, RERA brings transparency in the real estate sector paving the way for the economic growth of the country. It's time to begin your journey to buy your dream home that is approved by RERA for a secure and happy living.
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By: Shailaja K