The Real Estate (Regulation and Development) Act, 2016 (RERA) the landmark legislation, came into existence in order to boost investments and to protect and safeguard the interest of homebuyers against the unfair trade malpractices of the builders.The key objective of the Act is to bring greater transparency, accountability, financial discipline, speedy redressal of disputes and so on.
Benefits of RERA to Home Buyers:
Right to Information/disclosures
One of the main advantages of the RERA to the buyer is that before investing in property the buyer now has the full right to information about the builder and their projects. Post RERA, the builder is responsible for sharing all the relevant information with the buyers. Standardized Carpet Area
Before RERA, there was no standard formula for the computation of the carpet area, in the absence of any defined guidelines the builders use to inflate the carpet area which further increases and shoots up the cost of the property.
Post RERA, there is a standard formula for calculation of the carpet area; therefore, the builders would not be able to manipulate the same.
Prior to RERA, homebuyers had to pay advance payment as demanded by the builder; there was no cap on it. Now the builder can’t demand more than 10% of the cost of the property as advance or application fees before entering into the agreement.
Right of the buyer in case of false commitments/promises
In case of any disparity/difference between the commitments/promises made by the builder and the actual property, the buyer, in that case, has the option to withdraw from the project and will be entitled to a full refund of the amount paid in advance or otherwise along with the interest and claim compensation.
Right of the buyer in case of the defect after possession
The buyer would be entitled to rectification of defects free of cost in case of any structural defects, any defect in workmanship or in quality, service or provision, within a period of 5 years from the date of the possession. Any such defects would be rectified within a period of 30 days once the defects are detected.
If the builder fails to carry out the repairs within the stipulated time, the buyer can claim compensation for the same.
If the builder fails to deliver the possession of the property on the due date, then the buyer has the following options available:
- To withdraw from the project, wherein the buyer shall be entitled to a full refund along with the interest from the due date of completion till the amount is refunded.
- To continue with the project until its completion, wherein the buyer will be entitled to compensation along with interest payable from the due date of completion of the project till the project is actually completed.
Right of the buyer in case of a defect in title
If any time after the possession of the property, the buyer finds that there is a defect in the title of the property then the buyer can claim compensation from the builder.
Setting up of an Authority for grievance redressal
Post RERA implementation, the buyer can now approach the respective State Authority set up under RERA. If the buyer is not satisfied with the order passed by the State Authority, a complaint can also be filed or an appeal can be made with the Appellate Tribunal which will redress the case within 60 days and in case of failure to do so, it shall record the reasons of such failure or be extended with the reasons of delay.
RERA enhances builder`s credibility, How?
The Act also has adequate provisions to safeguard the builders from the buyers who purposely delay the due payments and/or not taking possession of the property after receiving a completion certificate. Also, RERA enhances the credibility of registered builders which helps them in securing investments/finances.
Benefits of RERA to builders:
Boost Buyers/Investors’ Confidence and Investments
Due to RERA, the buyers/investors can check the details of the builder and their projects on the respective state RERA website which will revive the faith of the buyers/investors on the builders which in turn will boost their confidence in real estate sector and increase the investments.
The establishment of a regulator will also result in the increase of foreign investments which will give a boost to the overall sector.
With the RERA being into existence, the builders will take reasonable care in uploading the details of the projects on the respective state regulatory websites, which will increase the transparency in the marketing and execution of the projects. Because of the increased level of transparency, the investment rate will be improved in the real estate sector.
Buyers accountable for a breach of agreement and delay in payments
The builder has the right to approach the regulator in case there is any dispute with the buyer. In case of any breach of the builder-buyer agreement by the buyer, the builder can hold the buyer accountable for the same.
In case of delay in payments by the buyer to the builder, the builder can claim interest and also file a complaint against the buyer for the non-payment with RERA. If the buyer creates a third-party interest without informing the builder, the builder can also take legal action against the buyer.
Timely possession of the property
Under RERA, the buyers are liable to take possession of their property within two months of receiving the Occupancy Certificate and cannot hold the builder liable for any further delays on their part.
RERA Benefits for Government:
The whole purpose of Government formulating a new Act is to bring the regulatory system in place. RERA is one such Act that benefits the government in various ways.
- The Government through RERA can regulate the real estate sector through its rules & regulations thus transforming a vastly unorganized sector into the organized sector. This hugely benefits the Government in sector-specific policy formulation, an authentic database of real estate sector economy and creation of a transparent system that boosts investor’s confidence.
- Under RERA, the Government is able to collate an authentic database of investment & revenue generation from the real estate sector. This information is very useful in formulating future policies & budgetary allocations for the economic development of the country.
- The real estate sector is one of the biggest contributors to GDP. With the implementation of RERA, prevailing corrupt practices in the real estate sector like black money transactions, lower stamp duty payments, unknown sources of investments, etc. which results in a revenue loss for Government have been vapid out. Now the Government has a very reliable source of revenue generation.
This article explains the importance of RERA. Each and every Home buyer, Builder must know the importance of RERA. RERA binds Home buyers and builders under its provisions. RERA protects the Home buyers and builders from different malpractices. This article clearly explains the benefits of RERA to Home buyers and builders. So, this article will help the Home buyers and builders from any type of disputes between them.