by akshayImpact of RERA on the Indian Real Estate Market
The growing population increases the demand for creating more shelters in the form of houses and apartments. Similarly, the number of projects allotting residences to the public has risen. To maintain a balance between the number of projects and their authenticity Indian government has passed a bill under Real Estate (Regulation and Development) Act, 2016.
Real Estate Regulatory Authority (RERA) came to action after its validation from Indian Parliament. Rajya Sabha passed the bill on March 10, 2016, and Lok Sabha cleared it on March 15, the same year. The Act gives every state the authority to regulate real estate world activities. For example, it readily resolves differences between two parties regarding property issues.
Features of the RERA Act
This Act focuses on the irregularities in the financial transactions, plot allocation, and documentation related to the buying and selling of properties. In addition, it safeguards the hard-earned money of the public during property dealing and acts as a shield from illegal encroachment and unfair means. Moreover, some features that the RERA Act covers are as follows:
- Detailed information on the project
- Clear documents and contract papers associated with the property dealing
- Clarity about the carpet area or the area surrounded by the walls
- Approved Site plans
- The on-time ending of the project work
- Solving issues as early as possible
- Penalty or imprisonment for 3 years for promoters in case of fake claims
- A 10% penalty for unregistered constructors
- Advance payment should not exceed 10% of the total cost
- reduction in size of the construction area from 1000 sq.m to 500 sq.
Advantages of the RERA Act
Many people have suffered from the fake promises of property dealers. For example, a contractor promises to complete an apartment in two years. Instead, he takes four years to complete. As a result, the buyer faces not only financial problems but also leads a stressful life.
Interestingly, this regulation includes all kinds of projects, either house building, reconstruction, or raising a corporate office building. A list of advantages for the citizens is here to help.
- Every promoter has to register his agency with complete and verified documents.
- They would be responsible for any construction defects after five years of project completion.
- Also, buyers can get an open image of the contractor’s identity, property ownership, and legal papers.
- Homebuyers can more confidently invest in the real estate sector because of better protection and provisions against fraudulent practices by promoters. Thus, it has raised the demand for buying timeless assets among the young generation.
- Moreover, it has increased the professional attitude and efficacy in the housing sector. As many former land dealers strive hard to keep up with the advanced technologies and new methods, they feel discouraged.
Furthermore, this Act protects consumers’ legal rights and ensures safe and sound property dealings. As the promoters are bound to answer the buyers and the government authorities, there remains little or no space for fraud. Despite this, there are a few drawbacks of the
Disadvantages of the RERA
Indeed, this revolutionary bill has modified the outlook of the real estate sector. However, many of the ongoing projects and construction works are not under its consideration. Further, it asks submission of identification cards, titles, deeds, and many other legal processes that several sellers have lost interest in the land deals. Here is a rundown of the cons of this Act.
- The collection and submission of papers are time-consuming. Hence, the overall timeline of the home allotments becomes long.
- Funds from earlier projects do not apply to newer ones. Consequently, more finance is needed.
- Approvals and permissions from authorities lengthen the duration of the projects.
- Minimum finance project dealers compete with the running time, rules, and legal procedures. Finally, they refrain from engaging in new projects.
- Insufficient resources, limited funds, a lot of stress, and the minimum profit levels force many developers to think twice before taking on a new project.
- Even though they complete all the processes and build an apartment, the prices are such that they cannot offer affordable rates to the customers.
- Often, the staff and the officials are fewer in number in the offices. Therefore, many of the procedures get delayed, and builders face distress.
Conclusion
The government of India has introduced many trendsetting Acts and made amendments to the existing ones. But RERA was a breakthrough against the irrelevant atrocities of the builders on the land owners and the new buyers. It improved the age-old practices in the real estate sector. Further, it opened a new arena of working methods that are dependable. On the contrary, it shut the doors to illegal alterations in the layout, structure, contract papers, and financial dealings. So, you must check all the paperwork before funding a project and get every detail about the dealer’s identity and reputation.
