What is RERA Act | Current Status | Compliances | Highlights | Benefits | Impact | How To Register | FAQ
RERA stands for Real Estate Regulatory Authority and it is a set of rules that has a direct impact on the real estate industry. Here, we are going to talk about the different regulations, rules, and laws and how it is going to influence the real estate sector in the right manner.
What Is The RERA Act?
RERA act was passed by the Indian parliament and was established under the Real Estate Regulation And Development Act of 2016. The underlying aim behind this act was to regulate the real estate sector and to ensure that all the different issues being faced by home buyers could be addressed in a befitting manner.
There are several different objectives of this act and here are some of the key salient points you need to know of.
- The act aims to protect the interest of the allottees and ensure that they take full responsibility
- It helps in implementing the same standards pan India and thereby brings in the right level of professionalism
- It enhances the reliability of the whole sector and thereby helps in improving the confidence that the investors have in them
- It helps in imposing the right set of responsibilities on builders and investors
- It aids in better transparency and thereby cuts down the chances of fraud
- It enhances better communication between the buyers and the sellers
So, one can see that the objective of this act is to prematurely infuse the right set of uniformity and rules in the real estate sector. Most home buyers had complained that the real estate sector was so designed that it was heavily in favour of the developers and the builders. So, the government decided to have an authority that could regulate the sector and bring in a more balanced approach.
RERA aims at making the whole real estate market simpler and much more transparent. They want to add to the transparency and bring in better accountability so that it is beneficial for everyone involved. It was very important to have a regulatory board that could oversee the different details and the transactions that happened in the real estate sector. As per this rule, it has become mandatory for each of the state and union territories to form their regulators. They have the power and authority to frame rules that will help in the better functioning of the regulatory board. This has made it so much easier to do the right thing as far as real estate transactions are concerned.
We are all aware of the massive amount of money that is involved in the real estate sector. No matter whether you choose to buy a home or even rent one, you end up paying a hefty sum. It is owing to this reason that it is important to have a regulatory action.
Current RERA Registration Status
Some states have managed to launch their website to kickstart the RERA process. Others have been notified but they are still to launch their website and some states are yet to come up with a notification about the details. Here is a summary of what is the status for all the states involved.
States with the website launched
States with websites yet to be launched
- Arunachal Pradesh
- West Bengal
Nagaland is one state that is still to be notified
The rest of the states have RERA websites that are currently active. They have several registered projects and agents already. Here is a summary of the details of the different states and the details of the projects.
|State/ union territory||Registered Projects||Registered Agents|
|Tamil Nadu||736 (only in 2020)||500+|
|Andaman and Nicobar Island||–||–|
|Dadra and Nagar Haveli – Daman and Diu||96||2|
|Delhi (National Capital Territory of Delhi)||18||70|
The Compliances Of The RERA Act
Here are some of the different RERA compliances that you need to know of.
- They inform the allottees about any additions or alterations that may take place
- They help in increasing the quality of construction owing to a defect liability for a period of up to five years
- They help in sharing information with regard to layout, project plans, land title status, government approvals and even sub-contractors
- They aid in forming the RWA within the specific duration or 3 months of time after the majority of the housing units have been sold off
- They need the consent of 2/3rd allottees for making any additions or even alterations
- They need the consent of 2/3rd allottees for transferring the majority rights to a third party
- They believe in asserting the need to complete the projects in a timely manner and thereby offer timely delivery
- They offer a unified legal approach that helps in the seamless purchase of flats and apartments
- They help in maintaining the right uniform standards for real estate across the country
Here are the top highlights of what the RERA act has to offer.
Establishing the regulatory authority
The real estate industry could feel the absence of a central regulatory board. There was no uniform or single legal board to look into the matters which often made things pretty hard to handle. On top of this, disputes and altercations were pretty common between the buyer and sellers. This is why the need was felt to have some kind of legal regulatory authority that could fix the issue.
The RERA Act established the real estate regulatory authority in each of the states and union territories. Apart from offering a fixed set of rules, the act also ensures that there is a robust grievance redressal system in place too.
In order to make sure that like the rest of the judicial system, justice doesn’t seem to lag. It has been mandated that all applications need to be disposed of within a time period of a maximum of 60 days. One has0 to give a valid reason should this timeline be extended.
As per the central act, if there is a real estate project which involves a total land area exceeding 500 square meters or even if there are more than 8 apartments in the project, the project will have to be registered with the state’s RERA body.
If there are any existing projects which haven’t issued any completion certificate or even an occupancy certificate, they too will have to comply with the registration requirements that are a part of the act.
When you are applying for registration, it is important that promoters fill in all the detailed particulars and this includes their personal details, the schedule for completion, the land status, the approvals, and more. When all of this is done, only then the project will be ready to be marketed.
Often it was seen that the funds that were collected for one project were channelized to kickstart another one. This was a wrong means and often led to unfinished and stalled projects. So, as a means to prevent this, promoters now need to park 70 percent of their project receivables into a separate count which is a reserve account.
All the proceeds in this account can only be used for land and construction expenses and they need to be well accounted for. This has helped significantly in improving the condition of the real estate sector.
The regular disclosures
One of the key clauses of the act states that home buyers will get the power and privilege to monitor the status and progress of the project on the RERA website. So the promoters need to make periodic submissions. It has become important to keep track of the progress and check the report duly.
Representing The Title
All promoters now need to make sure that they give a positive warranty on the right title and interest on the land. This can be used against the promoters by home buyers should any defect be traced in the title later on. It is also important to obtain insurance against the title as well as the project construction.
The Sale Agreement Standardization
The act has clearly prescribed a standard model sale agreement that needs to be present between the promoters and the home buyers. Earlier, there were minimal provisions for the penalty against the promoters while home buyers could be fined significantly for errors on their part. This system has been done away with and the right balance has been introduced to bring in better uniformity.
To ensure that the act is not violated under any pretext, strong monetary penalties ranging to as high as 10 percent of the project cost along with imprisonment can be enforced against those who choose to violate the act. This ensures that people will take the rules and the law much more seriously and will allow successful enforcement of the same thing.
So, these are the key highlights of the act that you need to know of.
The Benefits Of RERA
Here are some of the benefits that RERA has to offer.
- It definitely adds to the protection that home buyers now enjoy when processing a home
- It helps in increased transparency as one knows their sale as per carpet area
- It aids in better monetary safety and buyers know how their money is being put to use
- It ensures better and more timely delivery as the progress report can always be monitored
- The agreements are a lot more balanced and therefore home buyers get better treatment
- It helps them in being sure that they stick to the right and honest practices and makes it a norm
- It helps in introducing the right uniformity and standardization
- It ensures much better organized and regulated funding
- It helps in better corporate branding
- It increases the efficiency of the whole sector
- It is likely to trigger higher investment opportunities
- It also offers better security and safety net
- It minimizes litigation by making sure the right practices are followed
- It helps in better transparency
- It has helped in consolidating the sector by making it compulsory for each state to register the property sale
- It has definitely increased the net efficiency
Benefits For The Real Estate Industry
- It has regulated the whole environment
- It helps in the robust delivery of the projects
- It helps in improving the confidence of the investors
- It aids in better transparency and the right governance
- It helps in improved funding and the right form of investments as well
- It improves the confidence and trust of the investors
- It has improved the growth of the sector
The Impact On The Real Estate Industry
Now let us talk about the type of impact that this growth has on the real estate industry and how it has managed to shape this sector for the good.
There is no denying the fact that the whole project tends to have a slow start owing to the flurry of documentation and red herring involved. The promoter needs to furbish a lot of details including but not limited to their own details, the thorough execution plan, the status of the projects that have been executed in the last five years and so on. All these overheads, while compulsory for the sake of introducing better transparency have definitely led to slow starts. Gone are the days when a project could start in the blink of an eye. Now, owing to RERA, the promoters need to do a lot of initial groundwork before they can get to the subsequent parts.
The increased project cost
Owing to the registration and stamp duty charges and other charges involved, there is no denying the fact that the project cost has definitely shot up. A lot of people argue that all these costs are necessary when you see the trade-off that is involved. So, there is a valid justification for the shoot-up of expenses as well.
Owing to the need to move 70 percent of the proceeds to the reserve account and other regulatory procedures that have been kicked into action, it seems that the liquidity has gone down considerably.
Increase In Launch Time
Just like we said that the start has been delayed, and the effect can be seen in the overall project as well. You can easily sense how the overall launch time seems to have increased as the projects now take longer to be launched. The promoters need to be sure that they have taken good care of all aspects as this prepares them well for the launch.
How To Register Projects Under RERA?
If you want to be familiar with the whole process of registering the projects under RERA, here are the steps and details you need to know.
- Make sure to submit authenticated copies of all the different approvals that are needed along with the layout plan, sanctioned plans, commencement certificates, proposed facilities, sale agreement, conveyance deed, and plan of development work as well.
- The next phase is to fill in the application to register the project with RERA
- Before the project is launched, it is mandatory to register new and existing projects with RERA
- The agents and brokers too need to register with RERA for smooth compliance
- If there is any dispute, it needs to be resolved within 6 months at the appellate tribunals by RERA
- If a single project has several phases, each of them needs to be registered separately
- The developers also need to share details of their other projects if they were launched within 5 years. They also need to share the reason for any delay if that had happened and validate the possible cause
- The promoters need to make sure that they constantly update the project progress report on the RERA website
- If there is no fault of the developer, the project can get a maximum extension of 1 year
- A CA needs to execute the annual audits for the project
- The conveyance deed needs to be drawn in favour of RWA
- You need to execute construction and land title insurance
- Make sure to finish the perfect within the scheduled time period and then have it executed for sales
So, these are the key steps that you need to adhere to and you should be able to abide by the rule and guidelines and have the project approved in the right manner.
What is the RERA Act?
The real estate regulation and development act was passed by the Indian parliament back in 2016. The main aim was to ensure that most of the home buyers as well as the promoters could be protected. The idea was to bring in more investments and thereby push the real estate sector in the right direction.
What do you mean by RERA approval?
RERA approval is the other word for registering a project under RERA. The RERA Act has underlined certain guidelines and rules that promoters need to follow when working on their project. When they do all of the same, they are likely to be able to get the RERA approval. This is important for the sake of listing their project as complete and starting sales
Has RERA defined the carpet area?
In order to weed out the possibilities of discrepancies and to make sure that both buyers and sellers are clear about the exact area of the house they will be getting, RERA has defended the carpet area as the net usable floor area of the whole apartment. This will not include the area that is covered by the external walls or even the shafts and open terrace areas too. However, it will include the areas that come under the internal partition walls present in the apartment.
Is RERA useful for buyers?
RERA is indeed useful for buyers as it helps in being sure that the real estate market has a whole lot more transparency. It also offers a great dispute resolution centre that ensures that if there are any disputes, there is an appellate authority that will listen to them in the right manner.
Is it compulsory to follow the RERA Act rules?
Yes, it is absolutely compulsory to follow all RERA rules. If anyone, be it the promoter or the home buyer is found guilty of violating the laws, they will need to pay a huge monetary fine which could be as high as 10 percent of the project cost. It can also be coupled with an imprisonment order based on the type of flouting they have done. You can also check out RERA details in Maharashtra.