If you are planning to buy a flat, now should wait till May 1, when the Real Estate (Regulation & Development) Act (RERA) comes into force. The new law is going to reshape the entire real estate sector with the transparency and accountability it brings. The RERA will benefit the buyers in a huge way.
Below are the major provisions of the new law which will rein in errant builders:
1. The RERA makes it mandatory for a state to establish a State Real Estate Regulatory Authority. This government body could be approached for redressal of grievances against any builder.
2. Every ongoing and under-construction project is supposed to come under the regulator’s ambit. Registration is mandatory for all commercial and residential real estate projects where the land is over 500 sq m or includes eight apartments. Failure to do so will attract a penalty which may be up to 10% of the project cost, and a repeat offence could land the developer in jail.
3. The developer will have to place 70% of the money collected from a buyer in a separate account to meet the construction cost of the project. This will put a check on the general practice by a majority of developers to divert the buyer’s money to start a new project, instead of finishing the one for which money was collected. This will ensure that construction is completed on time.
4. Buyers of apartments which are typically offered for sale before the launch of the project often get ensnared. But not any more. Under the Act, every such phase will be considered a standalone real estate project, and the promoter will have to obtain registration under this Act for each phase separately.
5. The RERA makes it mandatory for developers to post all information on issues such as project plan, layout, government approvals, land title status, sub contractors to the project, schedule for completion with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information onto the consumers.
6. The current practice of selling on the basis of ambiguous super built-up area for a real estate project will come to a stop as this law makes it illegal. Carpet area has been clearly defined in the law.
7. Currently, if a project is delayed, then the developer does not suffer in any way. Now, the law ensures that any delay in project completion will make the developer liable to pay the same interest as the EMI being paid by the consumer to the bank back to the consumer.
8. The maximum jail term for a developer who violates the order of the appellate tribunal of the RERA is three years with or without a fine.
9. The buyer can contact the developer in writing within one year of taking possession to demand after sales service if any deficiency in the project is noticed.
10. The developer cannot make any changes to the plan that had been sold without the written consent of the buyer. This puts paid to a common and unpopular practice by developers to increase the cost of projects.