A quick look at the RERA and what it means for home buyers

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The new Real Estate (Regulation & Development) Act (RERA) is scheduled to come into force from May 1, 2017, and should offer some respite to home buyers in the country. Given below is a summary of the major provisions of the act:

  1. Every Indian state will be directed to mandatorily establish a State Real Estate Regulatory Authority. A primary function of this body will be to address customer grievances, providing home buyers with an official body solely dedicated to ensuring that builders hold up their end of the bargain.
  2. All projects under-construction (covering over 500 sq meters) will require mandatory registration at the State Real Estate Regulatory Authority.
  3. In order to reduce the misappropriation of funds set aside for construction, all developers will be expected to set aside 70% of the funds collected on sale in a separate account, thus curbing the menace of builders using these funds to start new projects before completing ongoing projects.
  4. Every phase of construction is to be treated as a real estate project in its own right, thus ensuring that phases are completed on time and buyers aren’t left with half-complete projects which have no end in sight.
  5. Project plans, layouts, government approvals, certificates, title deed sale status, completion schedules, etc. are to be submitted by the developer to the State Real Estate Regulatory Agency, and then to be communicated with customers as well ensuring transparency.
  6. Calculation of total cost will be done on the basis of carpet area and not super built-up area.
  7. Developers will be expected to pay the same interest as the interest on a customer’s EMI back to the customer for every delayed month in project completion.
  8. Violations of RERA rules can result in imprisonment for 3 years with/without fine.
  9. Within one year of taking possession of a particular housing/flat/development, the buyer can submit a statement of complaints in writing to the developer and demand after-sales service in the event that any deficiency is noted in the development.
  10. Buyer’s written consent will be required if the developer intends to make any changes whatsoever to the submitted project plans.

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