In this article, we will learn about the benefits and advantages of the RERA Act and also detailed information about this act.
RERA is an acronym for Real Estate Regulations Act. RERA, as the name implies, the Act intends to systematise or standardise specific real estate industry-related regulations.
The Government of India introduced the Act in 2016, aiming to protect the interests of different home buyers in the country. The Act’s sole purpose was to end the illegal and unfair practices of the builders in the real estate industry in which the home buyers were charged for a lot more than only the price of the property they intended to purchase. As a result, the government has established specific rules and regulations that every builder must adhere to when building and selling properties in the real estate industry.
RERA provides the advantage of preventing builders from charging home buyers for both built-up and superbuilt-up areas. Buyers are simply required to pay for the carpet area of the home they purchase, i.e. the area between the walls.
The idea of the Act was to offer complete transparency to the property buyers regarding the development of the houses in which they are investing as well as in the monetary transactions between both the parties, i.e., the builders and home buyers. As per the Act of RERA, builders need to follow a few specific rules and regulations. And failing to do so can lead to the buyers filing a formal legal complaint against the builders. The Act must be duly followed in all Indian states and applies to residential and commercial properties.
Advantages of the RERA Act
Buying a house is a big deal for everyone. It’s a quality investment, and buyers need to think beyond real estate prices. In addition, the contractor was free to form a buyer’s agreement with the contractor that he deemed appropriate, at his sole discretion. This practice encouraged many frauds, ultimately affecting buyers and rarely protecting their interests while making significant investments such as buying a home.
Therefore, the Government of India has solved the problem on its own to prevent these abuses and give homebuyers a sense of security by introducing the Act. But what are its benefits? Let’s check out!
The benefits of the Act of RERA are as follows:
- Right to transparency
- Standardised excess building area
- Builders accountable for defects
- Delay in the property development is restricted
- Builders can’t use your money for other projects
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Right to Transparency
The Act requires home builders to guarantee complete transparency in their information offered to home buyers. Builders must notify the home buyer about all aspects of the project, both major and minor, provide a brochure and keep these details up to date on their websites. Buyers must also be well-informed about the building layout and development execution
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Standardised additional area
One of the primary advantages of the Act of RERA Complaint is that the promoters and builders will not be able to charge the homebuyers for the built-up and the super built-up spaces. This means that home buyers must only pay money for the chosen carpet area of the property they purchase, i.e. the distance between the internal walls.
Also, builders will not be able to charge buyers for the building’s super built-up space, which is enclosed by the outside walls and includes things like the elevator, stairs, lobby, balcony, and many other common areas in the building. Furthermore, developers must obtain buyer approval before making any changes to the design of the project or related structures.
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Builders accountable for defects
The government of India has added an extra clause in the Act to protect buyers from poorly built properties, thereby ensuring that the buyers do not have to face any loose ends while purchasing a property. As a result, they prioritised construction quality, as it has always been a significant issue for buyers. A building must be free of structural defects for at least five years after buyers take possession of a house under RERA. If any faults or defects are discovered, the builder’s responsibility is to repair them without charging anything extra from the buyer. Furthermore, the defect on the property should be corrected within 30 days of notification.
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Delay in the project is restricted.
Previously, homebuyers had to deal with the inconvenience of not receiving possession of the property when promised. This is no longer permitted. Builders must complete projects within the time frame promised, and those who fail to do so must pay a 2% interest rate above the lending rate offered by the State Bank of India. Builders could face a three-year prison sentence for project delays.
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Builders can’t use buyers’ money for other property projects.
Alternatively, another significant advantage of the RERA Act is that the builders and developers are required to deposit around 70% of the funds received from home buyers into a different escrow account, from which funds can be withdrawn only according to the construction stage as per the support of the builders’ engineers and chartered accountants.
Builders are not eligible to ask for anything more than 10% of the property’s cost in advance before drafting a sale contract. Most building malpractices have decreased since the implementation of RERA. The Act’s implementation has proven to be a considerable respite for home buyers as they can now get what they are paying for. The Act is accomplishing its goal of protecting buyers’ interests.
Overall, the RERA Act has brought much-needed transparency and accountability to the real estate sector, making it a win-win for both developers and buyers.
Conclusion
In this article, we have explained the meaning of the Act of RERA and its significant benefits in detail. This act assists the best real estate developers in India in gaining the trust of prospective home buyers. The main goal of the Act is to protect home buyers’ interests while also bringing about standardisation in the industry of real estate. The Act’s introduction has also resulted in establishing a mechanism through which issues such as project delays, project quality, property pricing, and so on can be dealt with with transparency.
The purpose of the Act of RERA is to promote transparency, accountability, and efficiency in real estate. Ever since this act has come to power, the malpractices and frauds relating to real estate have been eliminated, and there has been a proper process in which the builder works. It safeguards the interest of both the parties without either of them feeling like the less privileged one. After implementing the act, real estate investment in Mumbai has increased.
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