What is RERA
RERA is an Act established for the regulation and promotion of real estate sector, to ensure sale of plot, apartment or building, in an efficient and transparent manner and to protect the interest of consumers by establishing an adjudicating mechanism for speedy disputes.
The benefits of buying RERA approved projects
1. Projects are monitored by regulatory authority
RERA acts like a regulatory authority that monitors the transactions between the buyers and sellers of real estate properties. It ensures a proper accountability for the funds collected and used for the desired purpose.
No builder or a real estate agent can sell you any property without being registered under RERA.
The following are the objectives of RERA
- Ensuring accountability towards the investors and protect their interest.
- Creating a right system using transparent and fair practices to reduce frauds and delays.
- Introducing professionalism and creating a common standard for the country.
- Promoting flow of information from the builder to the investor, so that the investors can take informed decisions.
- Imposing duties and responsibilities on the builder and the investor.
- Establishing a fast track dispute resolution mechanism to promote good governance in the real estate sector
RERA is like SEBI, but for real estate transactions
Read more about RERA from my article on Medium (This was a part of my capstone project during my post-graduation)
2. Can invest in projects during the construction stage
The edge of a buyer to purchase residential properties comes by starting the real estate investment during the construction stage. This gives the buyer an opportunity to invest in proportions and not put the whole sum on the table. It also allows the buyer to negotiate on the prices and get a discounted deal.
When you decide to invest during the construction phase, you need not give your entire capital upfront. The builder will take money from you in different intervals. Here, you can position yourself in a better way to manage your finances and invest in valuable properties with a potential for capital appreciation in the future.
All this, without the worry of the developer running away with your money or using your funds for other projects.
The developers now have strict guidelines to follow under RERA.
3. Security and transparency
Initially, the developers used to seldom inform their buyers while amending any changes in the drawings during the construction execution.
The builders sometimes used to take advantage of this loop hole by seizing money in the form of advances from people and then use it for personal and other expenses. As a result of which the projects had to undergo huge delays.
These delays could be painful to the buyers if they had indulged in taking home loans, as they now had to pay the additional interest for the delay incurred solely due to the developer.
As per the rules of the RERA, the builder has to disclose all his financial transactions and show the project progress to the buyers once in every quarter.
This facilitates as a better tool for investors to make the right decisions while and after purchasing the desired properties.
4. Standardized carpet area
There has always been discussions and debates on the topic of carpet area. There wasn’t any right answer to this explanation, making it difficult to compare properties.
Different builders had different interpretation for carpet area which made the buyers confused to differentiate properties. Sometimes, the builders used to misguide the uninformed people and sell properties by inflating the carpet area to pocket more revenue.
As per the definitions of RERA [Clause 1 k], Carpet Area is defined as “the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment“
5. Interest on late possession
Yes you heard it right! As per the clause 18 of the RERA Act, “if the promoter fails to deliver the project on time, he is liable to pay interest to the buyer, every month till the apartment is not given in possession of the buyer”. During this period, the buyer also has the right to withdraw his entire money.
This is by far the greatest advantage RERA has offered to the buyer. It becomes the sole duty and responsibility of the developer to construct and give the possession on time to the buyers.
The buyers now need not worry or feel the pinch of late possession as they now will be getting a monthly interest from the builder as a penalty for late completion.
Download the RERA Act to know more about the functions and duties of the stakeholder.
In conclusion
If you have purchased a residential property and are finding issues and discrepancies with the real estate developer, then feel free to reach out to me on atishlolienkar@gmail.com.
Having a work experience in construction contracts, has given me the edge to understand the taste of RERA act and its significance.
Buying a house is a dream for every individual and you must have every right to get your house possession on time.
You may also like to read more about REIT: 6 Reasons Why REIT are Better Investment Than Physical Asset