What Is the RERA Act? How It Benefits Homebuyers and Real Estate Investors in India?

When looking for a home, do you check the RERA number of the property? If not, then you should start doing so, to avoid all the unwanted surprises such as false information or advertising, delay in construction and possession. In this article, you will get to learn a lot about RERA and why it is important for homebuyers and investors. Let’s get started: 

What is RERA?

The full form of RERA is Real Estate Regulatory Authority. RERA Act came into existence on 1st May 2016. It is a government body that focuses on regulating and promoting the real estate sector in India, with the aim to safeguard homebuyers’ interest as well as ensure fair practices, reduce information asymmetry, and accountability and transparency in real estate transactions.

Which issues were homebuyers facing before the RERA Act?

Before the introduction of RERA, the Indian real estate market faced several challenges that left homebuyers vulnerable. Here’s a breakdown of the key issues:

1. Delayed Possession and Project Timelines:

Builders frequently missed deadlines, resulting in long delays in project completion. Homebuyers were left in a state of uncertainty, with possession of their properties delayed and, in many cases, financial stress mounting due to these delays.

2. Misleading Advertising and Lack of Clarity:

Developers often made exaggerated claims in their advertisements, leading to confusion among potential buyers. There was also a lack of clear information on key aspects of the projects, such as carpet area, pricing, and amenities, making it difficult for homebuyers to make informed choices.

3. Misuse of Funds:

Some builders diverted funds collected from homebuyers for one project to other unrelated developments or personal use. This resulted in projects being underfunded, which caused further delays or, in some cases, led to projects being abandoned altogether.

4. Unfair Contracts:

Sale agreements typically favored builders over buyers. For instance, penalty clauses for project delays were often skewed, with buyers facing higher penalties for late payments, while builders had minimal accountability for failing to meet delivery deadlines.

5. Absence of Grievance Redressal:

Homebuyers had limited options for raising complaints or seeking compensation. With the available legal avenues being slow and expensive, many buyers were left frustrated and without resolution to their issues.

6. Lack of Consistent Practices:

The real estate sector lacked standardization, which led to confusion and frequent disputes between developers and buyers. Without uniform rules and regulations, each developer followed their own terms, making transactions inconsistent and unreliable.

7. Super Built-up Area Pricing:

Builders often quoted prices based on the super built-up area, which includes common spaces and areas like balconies. This inflated the actual usable space and, consequently, the overall cost, leading to confusion and dissatisfaction among buyers.

Provisions or rules that real estate developers have to follow under RERA Act

The introduction of RERA brought much-needed reforms, improving transparency, accountability, and fairness in the sector. Here are some of the norms that a real estate developer has to follow throughout the development process of a property. 

• Developers are required to register their real estate projects with RERA before advertising or selling any units. They need to provide detailed information, such as land status, layout plans, and expected construction timelines.

• At least 70% of the money collected from buyers must be placed in an escrow account, and the funds can only be used for the project’s construction. This is to stop developers from using the funds for other purposes.

• Developers can only ask for an advance payment of up to 10% of the property’s price before the sale agreement is signed. This ensures buyers aren’t overcharged upfront.

• Developers must share full details about their project on the RERA website, including approvals, specifications, and project plans. If there are any changes, they must be reported, and buyers must agree to them.

• Developers are responsible for fixing any structural defects within five years of possession. Buyers can report issues, and the developer must address them within a month.

• RERA ensures that developers stick to the timelines given when registering their projects. If there are delays, buyers are entitled to compensation.

• The Act sets up Real Estate Appellate Tribunals to quickly resolve disputes between buyers and developers, offering a faster resolution process.

• Promoters must keep records of all transactions and provide clear documentation regarding property titles and approvals. They must also ensure that at least two-thirds of the buyers agree before transferring the rights of the project to another party.

• The Act includes penalties for promoters who fail to follow the rules, ensuring accountability in the real estate sector.

What are the benefits of RERA for homebuyers and investors?

RERA Act offers many benefits to investors and homebuyers such as: 

• Builders must calculate and advertise carpet area transparently, preventing inflated prices.

• Developers must deposit 70% of funds in a separate account, ensuring buyer protection.

• Builders can only ask for up to 10% of the total cost as an application fee.

• Any structural defects found within five years must be fixed by the builder at no extra cost.

• If the builder delays possession, buyers are entitled to interest on the paid amount.

• Builders must fulfill promises, or buyers can get a refund with interest.

• Buyers can claim compensation for any title defects discovered during possession.

• Buyers have the right to know the project’s status, layout, and progress at all times.

Does a RERA number expire?

The RERA number can become invalid or expire under certain conditions. Once a project is completed and an Occupancy Certificate (OC) is issued, the registration may be considered fulfilled and the RERA number inactive. Additionally, if a developer fails to meet RERA guidelines, such as delivering the project on time or providing promised amenities, the registration may be revoked. In some cases, developers must update their project status regularly, and failure to do so can lead to the invalidation of the RERA number. Renewal requirements and expiry rules may also vary based on state-specific regulations.

What happens if the RERA number expires before project completion?

If the RERA number expires before the completion of a project, it can lead to several complications for both the developer and the buyers. The developer is legally obligated to renew or update the RERA registration to ensure that the project remains compliant with the regulations. If the registration is not renewed or updated, the developer may face penalties or legal action from RERA.

Step-by-step guide to check RERA number?

To check the RERA number for projects in Haryana, you can visit the Haryana RERA official website and follow the search process.

Step 1: Go to the Haryana Real Estate Regulatory Authority website (https://haryanarera.gov.in/)

Step 2: Navigate to the HRERA tab on the left side. Click and Enter. 

Step 3: Click on Projects, then click SEARCH PROJECTS. 

Step 4: Click on Basic Search and fill the District Name. 

Step 5: Put the name of the Developer/Project in the Search bar and Enter.

Step 6: Click View Certificate or View A-H to view details of the project. 

Conclusion: 

RERA plays a crucial role in safeguarding homebuyers’ interests by ensuring transparency, timely project delivery, and adherence to legal standards. It provides a platform for grievance redressal, fostering trust and confidence in the real estate sector. With RERA in place, homebuyers are better protected from fraudulent practices, making it a vital framework for a secure and reliable property purchase experience.

Now that you know why RERA is important for homebuyers, don’t forget to check the RERA number of the project when planning to buy a home. Don’t want to go through the hassle. Let Inframantra help. Inframantra is one of the best real estate companies in Gurgaon, Noida, Delhi, and Pune that offers best home-buying services without any brokerage. We have a large inventory of premium residential properties in the prime locations of the city. 

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