By Arvind Hali, MD & CEO, ART Affordable Housing Finance
Union Government introduced RERA, Real Estate (Regulation and Development) Act 2016 on 26th March 2016 and all its provisions came into effect, from May 1, 2017, in order to benefit the end users and rationalizing costs and resources. While RERA has many long-term benefits for real estate as a sector, it is immensely beneficial for the aspiring homeowners, helping in rationalizing cost, decreasing chances of delay in possession and also giving them a clear idea about how their hard money is getting deployed. Here is the list of benefits the home-buyers will enjoy with RERA.
Homebuyers need not worry over the delay in possession causing monetary losses:
Home-buyers have suffered project delivery delay in last decade, in few cases, the delays have been substantial causing the home-buyers mental agony and financial distress. The reasons behind the delay could be builder’s own personal gains or land title issues. Often the dispute on land-ownership led to a delay in construction and delivery. In absence of any rules, home-owners were left in a lurch in-case of no possession for years unable to make the builder answerable for the issue.
Under the RERA guidelines, the new projects require having a clear land title on which the real-estate project is supposed to be developed. It requires a written affidavit to be provided by the promoter that the legal title to the land on which the development is proposed, has legally valid documents.
The guidelines in RERA have also ensured heavy penalties on builders in case they delay in giving possession to buyers. The possession date will be sacrosanct. In this process, Home-buyers will be able to plan their rental stay, ensure financial adequacy and peace of mind.
Homebuyers will now know how much they are paying for:
In Pre-RERA days, customers were charged on carpet area, a built-up area sometimes even super built-up area. There was no written standard regulation to check the disparity, causing irrational charges for the customers, pushing up the overall purchase price. According to RERA, there is a clear definition of Carpet Area to the buyers. It is defined as ‘the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’. This will enable customers to know exactly how much they are paying for and make informed decisions.
Stop on fund diversion:
Diversions have been the biggest concern in the real estate industry. As per RERA, the builders need to maintain a separate account in a scheduled Bank where 70 percent of the amount received from the home-buyers has to be mandatorily deposited time-to-time, explicitly to cover land and construction cost. The builders cannot divert their funds raised from one project to another, which was a common practice until now. RERA is preventing this by placing a strict obligation on builders
RERA has now asked promoters to disclose project related details, including project plan, layout, and government approval-related information to the customers such as sanctioned floor space index (FSI), number of buildings and wings, number of floors in each building, etc. Promotors will have to make these periodic submissions to the regulator to ensure proper governance. Thus, customer need not worry about promises vs. delivery.
Builders responsible for any defect in the house:
RERA outlines the builder’s responsibility towards the structural quality of the building. Any structural defect or any compromise in terms of quality or service on builder’s behalf can be brought to notice of developer/promoter within five years from possession. The builder has to ensure that these grievances are resolved within 30 days and that too with no additional cost. This again comes as a huge relief as structural issues that may cause heavy losses to the new homeowners, in addition to the ongoing EMIs and society maintenance charges.
RERA guidelines have not only outlined the structure to bring in accountability to the builders, it also allows claims and compensation against the delay in delivery by the law-makers and end-users. It is a regulatory move which aims at ironing out issues for both the home-buyers and the builders, enabling them to make a positive impact in the sector in the long-term.