What is the RERA (Real Estate Regulatory Act)?
|The Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act passed by the Indian Parliament. The RERA seeks to protect the interests of home buyers and also boost investments in the real estate sector. The Rajya Sabha passed the RERA bill on March 10, 2016, followed by the Lok Sabha on March 15, 2016 and it came into force from May 1, 2016. 59 of its 92 sections were notified on May 1, 2016 and the remaining provisions came into force from May 1, 2017. Under the Act, the central and state governments, are required to notify their own rules under the Act, six months, on the basis of the model rules framed under the central Act.|
For long, home buyers have complained that real estate transactions were lopsided and heavily in favour of the developers. RERA and the government’s model code, aim to create a more equitable and fair transaction between the seller and the buyer of properties, especially in the primary market. RERA, it is hoped, will make real estate purchase simpler, by bringing in better accountability and transparency, provided that states do not dilute the provisions and the spirit of the central act.
The RERA will give the Indian real estate industry its first regulator. The Real Estate Act makes it mandatory for each state and union territory, to form its own regulator and frame the rules that will govern the functioning of the regulator.
Impact of RERA on real estate industry
- Initial backlog.
- Increased project cost.
- Tight liquidity.
- Rise in cost of capital.
- Increase in project launch time.
Initially, a lot of work is to be done to get the existing and new project registered. Details such as status of each project executed in last 5 years, promoter details, detailed execution plans, etc., needs to be prepared.
With the advent of RERA, specialised forums such as the State Real Estate Regulatory Authority and the Real Estate Appellate Tribunal, will be established for the resolution of disputes pertaining to home buying and the aggrieved party will have no recourse to other consumer forums and civil courts, on such matters. While the RERA sets the groundwork for fast-tracking dispute resolution, the litmus test for its success, will depend on the timely setting up of these new dispute resolution bodies and how these disputes are resolved expeditiously with a degree of finality.
How to register projects under RERA
- Authenticated copy of all approvals, commencement certificate, sanctioned plan, layout plan, specification, plan of development work, proposed facilities, Proforma allotment letter, agreement for sale and conveyance deed to be given when
- Applying for project registration with RERA.
- Mandatory registration of new and existing projects with RERA before launch.
- Registration of agents/brokers with RERA.
- Dispute resolution within 6 months at RERA and RERA appellate tribunals.
- Separate registration of different phases of a single projects.
- Developers to share details of projects launched in last 5 years with status and reason for delay with RERA.
- Timely updating of RERA website.
- Maximum 1 year extension in case of delay due to no fault of developer.
- Annual audit of project accounts by a CA.
- Conveyance deed for common area in favour of RWA.
- Construction and land title insurance.
- Project completion time period.
Benefits of RERA
What information does a builder need to provide under RERA
- Number, type and carpet area of apartments.
- Consent from affected allottees for any major addition or alteration.
- Quarterly updating of RERA website with details such as unsold inventory and pending approvals.
- Project completion time frame.
- No false statements or commitments in advertisement.
- No arbitrary cancellation of units by promoter.