How Faith in Property Investment restored post RERA

How Faith in Property Investment restored post RERA

How Faith in Property Investment restored post RERA

Parking your money in real estate has always been a popular deal of investment. Apart from the need of having a comfortable and suitable home, the fact that property bought today can be sold tomorrow at a better rate is a driving force for property investment. However, the rise of fraudulent practices under the blanket of real estate led to a downfall in property investment in the country.

Pre-RERA chaos:

The deceitful cases in the real estate sector were on the rise, multiplying day by day. It created a menace in the industry. Many people opted out of buying newly built or under construction real estate projects due the prevailing fraudulent trends like: selling same property/plot to many people, selling a property which is under litigation, showing some property and selling different, selling excess land, not delivering the property as promised and the list goes on.

Establishment of RERA (Real Estate Regulation and Development) Act, 2016:

The malpractices led to the dire need of boosting transparency in the real estate sector in India, and which ushered the introduction of RERA (Real Estate Regulation and Development) Act, 2016. The act seeks to safeguard the home buyers, help encourage investment in the real estate and introduce best practices in the realm of real estate.

Under this act, a regulation authority, Real Estate Regulatory Authority (RERA) has been set up for each state to regulate the real estate sector in its respective state. Moreover, it also adjudicates on disputes for speedy Redressal. The bill was first passed on 10 March 2016 by Rajya Sabha and on 15 March 2016 by the Lok Sabha. It came into force on 1 May 2016. The act comprises of 92 sections.

How does RERA protect home-buyers or investors?

The following compliances under the RERA act seek to curb any fraudulent practices prevalent in the real estate sector:

  • Every developer needs to be registered under the act before they advertise or launch their projects.
  • Mandatory registration of every real estate project which proposes to develop a total area exceeding 500 Sq.Mts. or 8 Apartments/Flats in one phase of development.
  • Prior-consent of the allottee for any addition or alteration in the property.
  • Oversee the timely completion of projects and delivery to the buyer.
  • The assertion on construction quality.
  • Compulsory formation of RWA (Resident Welfare Association) within the stipulated time or 3 months after most of the units are sold.

The most attractive aspect of RERA is that it extends a unified legal regime, which was earlier lacking for the purchase of apartments & flats which is now uniform across the country.
In the case of defaulters, stiff monetary penalty (up to 10% of the project cost) and an imprisonment is being levied.

Restoring the faith…

A law is meant to leverage the people with the power to move the court or respective authority in case of any wrongdoing done to them. Similarly, the need of such an authority or act, solely dedicated to real estate industry was long felt.