“RERA aims at promoting growth of the real estate sector by creating an environment of professionalism and transparency for the genuine sellers and of trust and confidence for the genuine buyers.”
It is almost two years now since the Real Estate (Regulation and Development) Act, (RERA), came into force in parts and two years since it came into force in its entirety across India.
This much-anticipated Act was touted to bring a tectonic shift in a sector that was habituated to being largely unorganized and unregulated for a very long period of time.
Pre RERA: Bull in a China Shop Scenario
Prior to RERA, there were growing number of complaints and cases of buyers being victimized at the hands of unscrupulous promoters and developers. The risks of payment, delays, quality, title, and changes rested solely upon the buyers as the consumer protection laws were at best, curative and not preventive. Moreover, the wrongdoers would often resort to high handedness and arm-twisting by using money and muscle power to dissuade the aggrieved buyers from seeking legal recourse.
This created an enormous trust deficit in the marketplace and painted even the honest developers with the same brush.
Thus, it was the need of the hour for the government to take corrective measures in the interests of the industry as well as the market. And it came in the form of RERA.
RERA: A New Era
The RERA Act establishes a Regulatory Authority (RA) in each State and Union Territory of India for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal.
RERA aims at promoting growth of the real estate sector by creating an environment of professionalism and transparency for the genuine sellers and of trust and confidence for the genuine buyers.
The main objectives of RERA include:
- enhancing transparency and accountability in real estate and housing transactions;
- providing uniform regulatory environment to ensure speedy adjudication of disputes and orderly growth of the real estate sector;
- boosting domestic and foreign investment in the real estate industry;
- promoting orderly growth through efficient project execution and standardization; and
- offering single window system of clearance for real estate projects.
Thus, RERA seeks to bring and maintain an order in an otherwise chaotic industry and marketplace and lead to a win-win situation for all.
RERA Binds All
The Act now makes it mandatory for the promoters and developers to register each qualifying project under RERA and maintain a separate bank account for that project. Seventy per cent of the money received from the buyers is to be deposited in that account. This fund can only be used for the purposes of construction and land cost.
Further, the developer will also have to make public the original sanctioned plans and any changes made later, total amount collected from allottees, money used, original timeline for completion and the time period within which the project will be completed – all certified by an Engineer, Architect, or a practicing Chartered Accountant.
The Regulatory Authority maintains website carrying information of all such RERA registered real estate projects for the benefit of buyers and public.
The Act also lays down the guidelines for marketing and advertising of the registered projects. Accordingly, the promoter of any plot, apartment or building – as the case may be – cannot advertise, market, book, sell or offer to sell, or invite buyers in any manner in any real estate project or part of it, and in any planning area, unless the project is first registered with the authority.
The promoter then has to ensure that the RERA registration number is displayed in their marketing communication and all forms of advertisements.
RERA also brings the real estate brokers under the purview of regulations. They also need to be registered under the Act and are bound to give or display only the facts to potential buyers.
The buyers too have the responsibility to book and buy their property from only RERA registered developers and only in such registered projects.
Recourse under RERA
The RERA Act is expected to serve as a strong deterrent for the promoters and developers to prevent consumer grievances. It also lays down a procedure to take any errant promoter, allottee and/or real estate agent to task.
A complaint can be filed online under Section 31 of the Real Estate (Regulation and Development) Act, 2016, either with the Real Estate Regulatory Authority or the adjudicating officer.
The complaint is to be in the form prescribed under the rules of the governing State. The law has a provision of a maximum jail term of three years, with or without a fine, for a developer who violates the order of the appellate tribunal of the RERA.
Conclusion
So, is RERA a game changer in the real estate market?
The answer is, of course.
RERA not only establishes the rules of the game for all but also appoints a referee to flag and penalise the errant players.
Will it make a difference?
The results are already beginning to show in the form of a market shake-up and consolidation. As for the long-term outcomes, we will need to wait and watch since they will decide the future shape of the industry and market.
About the Author
Dr. Mahesh Rathi, is the founder of Windsor Shelters – a real estate company operating out of Pune in Maharashtra, India and has worked ceaselessly in establishing it as one of the stable and respected brands in the industry. He is a Doctorate in Construction Management & an MBA with specialization in Business Management.
