India’s position as a high-potential market has made regulation a necessity. With real estate booming even in tier-2 and tier-3 cities, India is on its way to becoming a real estate hub. Without a governing body, the market could run rampant with fraudulent acts and scams. It is why the Indian government passed the RERA Act.
The RERA Act came into existence in 2016. It was a significant moment for the Indian real estate market. The government of India recognized the need for transparency and regulation in real estate.
Why should the RERA Act concern you? Before the RERA Act, the real estate market in India favored builders and developers. It created a biased market for homebuyers: they were left open to scams and project delays.
What is the RERA Act?
RERA stands for Real Estate Regulatory Authority. The Indian government established RERA in 2016 to ensure pan-India standardization of properties. One of the immediate goals of the RERA Act was to maintain transparency and boost investments in the Indian realty sector.
Here are some of the primary objectives of RERA:
- To establish a regulatory body in the real estate sector.
- To maintain transparency in projects for all parties involved.
- To safeguard the interests of consumers in Indian real estate
- To establish an adjudicating procedure to fast-track dispute redressals.
- To provide background information about the builder and developer and avoid fraudulent acts.
Highlights of the RERA Act
Mandatory registration
The RERA Act mandates that any development project exceeding 500 square meters or comprising more than eight apartments must undergo registration with state authorities. Projects without completion or occupancy certificates also require registration.
Developers must provide the following details during registration:
- land status
- schedule
- approvals
- details of promoters involved
Furthermore, developers cannot market the property before registration. They need to receive all necessary approvals before marketing the property.
Title Representation
Title representation allows homebuyers to hold developers accountable in case of discrepancies. Promoters and developers must be straightforward about their interests and title on the land. This clause again protects homebuyers from dishonest developers.
Standardization of Sale Agreement
Under the RERA Act, both buyers and developers get a standardized sale agreement. Earlier, homebuyers had little say in the sale agreements. RERA ensures that no party gets equal representation with sale agreement standardization.
A separate Reserve Account
Developers must reserve 70% of the project receivables into a separate reserve account. It prevents developers from diverting funds to different projects. Now, these funds can only be used for land development and construction. This clause in the RERA Act adds an advantage to homebuyers.
Regular disclosures from promoters
Homebuyers must get frequent updates from developers and promoters. It is a mandate under RERA which allows homebuyers to monitor the project development process.
Complaints and Penalty
A homebuyer may register their complaint with the Real Estate Regulatory Authority. If found guilty, RERA charges a penalty of up to 10% of the project cost. Violators may also face prison time.
Why should you care about RERA?
The Real Estate Regulatory Authority has a stringent verification process. It seeks to build investor trust in projects. RERA encourages more organized funding from investors, thus consolidating the Indian real estate market. For NRIs, RERA is a boon because of its verification process. While there is an additional delay for project launches, dispute redressal is much faster. Furthermore, there is minimum litigation involved in the whole process.
RERA seeks to reduce the delays in projects of real estate background. It also aims to prevent scams in real estate. For instance, RERA requires mandatory registration of properties. It thereby reduces the chances of fraudulent acts in real estate. The verification makes it safer to invest in properties, particularly for NRIs or people who cannot keep checks on the builder.
RERA’s real-time impact on Home Loans
The Real Estate Regulatory Authority directly impacts home loans. With more transparency and accountability, there is faster disbursal of home loans, especially for first-time home buyers. The pan-India standardisation has made it safer to invest in properties. Furthermore, it has become easier for home loan agents to verify and weed out dishonest projects.
Frequently Asked Questions
What does the RERA full form mean in real estate?
RERA stands for Real Estate Regulatory Authority. It is an ACT passed by the Indian government in 2016 to regulate the Indian real estate market.
What is the objective of the RERA Act 2016?
The Government of India wanted to create more transparency and regulate Indian real estate. They passed the RERA Act to hold people accountable and protect the interest of all parties involved.
The Real Estate Regulatory Authority seeks to consolidate the Indian realty sector. It safeguards the interests of all parties involved in the agreement. As a home loan applicant, you are at an added advantage. In case of any default on project completion, the interest rate is borne by both parties involved. Furthermore, home loan distributors like ApnaPaisa make it easier to apply for home loans online. To conclude, RERA is a boon for all parties involved.
