What is RERA?
Real Estate Sector in India has over the last decades gone through a transformation in terms of markets, products and regulations. Over the recent years, the regulatory compliance in Real Estate Sector have gone many notches up by introduction of Real Estate (Regulation and Development) Act 2016 (RERA). RERA intends to bring transparency and accountability in the sector. Besides mandatory registration for Real Estate Projects and Real Estate Agents/ Intermediaries, a host of disclosures are required to be made by the Promoters of such Real Estate Projects. There are significant penalties proposed for non compliances. Further, Buyers/Allottees are bestowed with host of rights and are abundantly protected. A fast track mechanism for non compliance and for grievances redressal is provided.
1. What is RERA and objectives of RERA?
RERA as popular known stands for Real Estate (Regulation & Development) Act, 2016. It is an Act to regulate Real Estate Industry in India. The key objectives of RERA are:
- Promote efficient and transparent Real Estate transactions and for consumer protection
- Establishment of Regulator for regulation and promotion of Real Estate Sector and
- Establish a speedy adjudication mechanism by establishing the processes at Regulator level and by creating Real Estate Appellate Tribunals etc.
2. What are its salient or key features of RERA?
Some Salient / key features of RERA are
- Every real estate project over 500 Sq Mtrs or 8 Flats or more need to be registered with the State RERA i.e State Real Estate Regulatory Authority
- Completion certificate on or before April 30th, 2017 shall also be categorised as ongoing project and shall need registration with RERA (Real Estate Authority) of the concerned state
- No advertisement or booking can be made by the Promoter/Developer without registration.
- For & on registration with Authority, Promoter/ Developer, has to provide a host of information in regard to his track record, the details of project under registration including the type of land, locations, litigations, status of payment of land, status of approvals, schedule of implementation of the project, type of product, specifications, details of project participants like Architects, Engineers & Real Estate Agents etc is required to made. In case of Ongoing Projects, status of projects including status of approvals, development, monies collected and spent on project etc need to be disclosed.
- Periodic updation of the status of project including sales etc is required to be made.
- Misleading advertising, unfair practices leading to mis -selling are punishable. Disclosure of Carpet Area and rate per sqft for carpet area and others is introduced to bring in more transparency.
- 70% of customer receipts are to be retained in a separate account. The monies parked in this separate account can only be withdrawn by the promoter for land and construction costs in proportion to the percentage of completion of the project. The monies can be withdrawn only to the proportion to the percentage of completion of the project as certified by the Architect, Chartered Accountant and Chartered Engineer.
- Rate of interest for refunds and delays is now defined and have been standardized both from the customer’s end and developer’s end.
- RERA has introduced standard agreement to Sale ‘has been introduced. No monies beyond 10% can be collected by the developer without entering into a Registered Agreement to Sale.
- Developer/Promoter is liable to rectify any defect for a period of 5 years from the date of handing over of the possession.
- Real Estate Agents now have to be registered with the STATE RERA Authority and they have certain duties and obligations to fulfill.
- Buyers have given elaborate rights like right to receive the information, copies of sanction plans, approvals, right to receive compensation against misrepresentation or unfair practices, for delays in handing over possession etc.
- Stringent penalties on developer up to 10% of estimated cost of the project and/or imprisonment up to 3 years have been provided for violation of various provisions of the Act. The penalties on Real Estate Agents and Customers for non adherence to the provisions of the Act also are equally stringent considering their obligations.
- A speedy complaint redressal mechanism has been established under RERA. Regulator/Adjudication officer of the Regulator has been empowered to look into complaints from customers or suo moto on the violations of the Act. Real Estate Appellate Tribunal (REAT) are to be established for quicker disposal of appeals. A 60 days period is defined for redressals. This should enable a focused platform for real estate dispute redressal instead of consumer forums /courts etc where they are clubbed with many other consumer disputes.
3. Why does RERA (Real Estate (Regulation and Development) Act of 2016 not been implemented in every state of India?
RERA is a Central Act and is applicable across India except Jammu & Kashmir. In terms of RERA, State Governments were tasked to set up administrative mechanism, primarily State Real Estate Regulatory Authority & Real Estate Appellate Tribunal and to make rules etc. However, States have been slow in set up the administrative mechanism. Central Government has been pushing States and have gone ahead and notified all the operative sections. RERA is now fully effective from May 1st, 2017.
4. Is there lack of coordination between the state governments and the Central government?
No, more than the coordination it is slowness from certain state governments which is slowing down the process.
5. Are the state governments trapped in the lobby of Realtors?
State Governments while being slow due to administrative reasons have to be pragmatic in implementation. RERA is a reality and it can not be further delayed. Housing is a need and a regulated real estate industry well augur well for overall economy.
6. Is the state government taking the RERA lightly?
State Governments have been very slow in reacting to the changing landscape of Real Estate Industry. 'Housing for All’ is a mission and there is a great push for Affordable Housing. Affordable Housing has attained the status of infrastructure industry and State Governments fully understand the need for the same.
7. Is still India not ready for the RERA?
Infact, RERA is the need of the hour. Real Estate industry is plagued with allegations of opaqueness. RERA will bring in transparency and credibility. Real Estate transactions will be more transparent, buyers will have more information available to understand credentials of Developers and Projects.
8. What is possible impact of new RERA bill?
RERA Bill is no more a Bill but a an ACT passed. It is now law of the land. Impact or benefits of RERA can be summed as follows
- RERA will bring in transparency and credibility
- It will regulate Real Estate transactions and thereby will make overall industry much more organised.
- By bringing in Real Estate Agents into the ambit of RERA, lot of opaqueness in the Industry should be eliminated.
- A discipline would be instilled in the operations and fly by night operators would be eliminated.
- A speedy dispute redressal mechanism should bring down litigations.
- Transparent dealings may restore confidence of investors and more FDI may flow into Real Estate there by further stimulating the economy.
- More organised industry and many more benefits having critical impact on the Real Estate Industry.
9. How will RERA protect the buyer's Rights & what would be the difference in the scenario before and after it?
Now, buyer is the king. RERA is a customer centric Act. Infact. Preamble itself highlights the buyer centric approach. Buyer has many more clearly defined rights and will have a host of information to enforce them. A speedy redressal mechanism provides for effective enforcement of buyers rights.
10. How the real estate industry would be changed by RERA, Will it stop the circulation of black money in real estate?
RERA is no more just a RERA Bill but an ACT, It should improve transparency and thereby bring down circulation of black money.
11. How can I become a real estate developer in India After new RERA bill?
Real Estate (Regulation & Development) Act, 2016 is no more mere RERA Bill, it has been passed by parliament in March 2016 and is now an Act and is applicable across India excepting Jammu & Kashmir. RERA is being implemented across states. As a developer before advertising or inviting for sale of any Real Estate project of over 500 Sq mtrs or 8 Flats, registration of the project with the State Real Estate Regulatory Authority is mandatory.