Homebuyers: Here is how RERA will protect you
With the real estate developers delaying projects, overcharging and engaging in other fraudulent practices, home buyers are usually left at the mercy of powerful builders. Over 80% of the 25 lakh odd residential projects launched over 10 years have been delayed. Homebuyers put their entire life’s hard earned money to buy their dream house and are ultimately left at whims of the builder. Currently, homebuyers do not have a point of contact to track the progress of a project, builders advertise and sell ambiguous super built-up area.
To resolve the helpless of homebuyers, the government has introduced RERA which puts buyer’s interest in the forefront. In the RERA era, the homebuyer is the king and the builders will have to ensure compliance to avoid punishment. The National Capital Region-Delhi accounted for most delays, followed by the Mumbai Metropolitan Region. Ahmedabad, Kolkata, Pune, Bengaluru, Hyderabad and Chennai didn’t fare much better. As per RERA each State and Union Territory will have its own regulator and set of rules to govern the functioning of the regulator. Following are the ways in which RERA protects you:-
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Builders need to compulsorily register with RERA
To track down fraud builders and protect buyer’s interest, a developer has to register with the regulatory authority before he starts to invite, advertise, sell, offer, market or book any plot. After registration, all the advertisement inviting investment will have to bear unique RERA registration number. The registration number will be provided projects. For the projects that are already ongoing on the date of the commencement of this Act are required to register within three months since 1st May 2017.
Limitation on accepting advance payment
To further protect the interests of the buyers, RERA mandates that the developer cannot ask for more than 10% of the property’s cost as an advanced payment booking amount before actually signing a registered sale agreement.
Restriction on using of funds received for a project
The promoter of the project is required to maintain a separate escrow account for each of their projects and deposit 70% of the money received from investors and buyers in that account. This money has to be only used for the construction of the project and the cost borne towards the land.
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Track the status of projects, clearances obtained etc
To bring transparency and accountability and instil confidence of the homebuyers in the builders, builders are required to have trustworthy credentials before commencing any project. They need to register under RERA state authority and submit all information pertaining to clearances obtained from various departments, annual reports, balance sheet, cash flow statement and auditor’s report.
Assurance of Quality
Homebuyers suffer on account of the poor quality of construction material used by the builders. RERA addresses this issue by ensuring a quality check on the flats constructed by builders. The regulator will ensure protection to buyers in the matter from five years from the date of possession. During this five year period, if the buyer highlights any issue with respect to quality of construction before the regulator, then the builder is under an obligation to rectify the same within 30 days.
Delay in completion of a project
Builders cannot delay delivery of flats to homebuyers. Projects need to be completed on time and failing which buyers will have to compensate homebuyers with an interest rate of State Bank of India’ highest marginal cost of lending rate plus two per cent within 45 days of it becoming due.