The Real Estate Regulations Act or RERA was introduced by the Centre in 2016 to safeguard the interests of home-buyers by protecting them against the malpractices of certain dishonest developers which had once eroded consumer confidence and given a bad name to the entire industry.
Some of the primary objectives of the Act are:
# Safeguarding interests of allottees and ensuring their responsibility
# Ensuring all-round transparency and thus, minimizing chances of fraud
# Rolling out a countrywide uniformity of standards and foster better professionalism
# Ensuring transparency of communication between developer and buyer
# Making the developers and investors assume greater responsibility
# Boosting confidence among buyers in the real estate sector as a whole through built-in checks and balances
What about West Bengal?
While all the other states had adopted RERA from the word go, West Bengal was the only state which enacted its own version of the regulation, terming it the West Bengal Housing Industry Regulation Act or WBHIRA. However, later, it has agreed to implement the central registration in the state with a couple of riders – one, to protect the builder against “any unforeseen circumstances” preventing him from fulfilling the contract like “war, drought, flood, fire, cyclone, earthquake, etc and two, a garage is defined by any parking space sanctioned by the government without the compulsion to provide a roof and three walls as mandated by RERA.
What are the main benefits of RERA for the consumer?
# Standardized definition of carpet area: Earlier, there was no uniform guidelines for measuring carpet area, and home-buyers often felt shortchanged. Now, for the consumer’s peace of mind, the standardized definition of carpet area is “the 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 has made it impossible for developers to mislead buyers, thus inspiring confidence.
# Interest rate on default: RERA has ensured parity of interest rates for both seller and buyer in case there is delay in delivery of a property by the former or a payment default by the latter. Earlier the scenario was lopsided and loaded in favour of the developers since they paid less rate of interest in case of delay in giving possession, while the buyer was subjected to a higher penalty in case of any payment default. Now, the rate of interest payable by both parties must be the same and is determined by prime lending rates of SBI plus 2%.
# Protection against builder bankruptcy: Earlier, developers often used to divert funds raised from customers of a certain project to finance other developments. RERA mandates that the builder has to deposit 70% of the amount realized for a particular project in a separate escrow account and can withdraw money from this account in phases of construction which are completed and certified by a civil engineer, an architect and a practising chartered accountant. This is also designed to ensure timely completion of the project.
# Protection against false promises: The interest of the buyer is now protected by this legislation since she/he reserves the right to withdraw from the project and is entitled to a full refund of any advance payment in case of any inconsistency regarding commitments made by the builder and the actual project delivered.
# Cap on advance payment: According to the provisions of RERA, the developer cannot seek an advance payment or application fees of over 10% of the cost of the property before execution of the agreement for sale.
# Protection against defects: The buyer now has the peace of mind while buying a RERA-certified property, stemming from the assurance that any structural defect or defect in terms of quality, workmanship, provision or service, detected and reported within 5 years of getting possession of the property, will have to be fixed by the developer free of cost within a month.
# Insured against delay: In case the developer fails to complete and deliver the project on time, the buyer can either pull out of the project with full refund along with interest payable from the completion due date till the refund of the amount, or stay with the project till completion and seek compensation along with interest accrued from the due date till actual date of completion.
# Protection against defect in title: In case you stumble upon any defect in the title of the property you purchased, you are entitled to compensation from the developer, and there’s no time limit for seeking this compensation.
# Grievance redressal: The buyer has the leeway to take up any grievance with the state authority formed under the auspices of RERA, which is vested with the power to redress any such grievance. In case the buyer wants to escalate the issue, it is possible to take the grievance to the appellate tribunal which is mandated to redress the grievance within 2 months. If it can’t resolve the issues, it is supposed to record the reasons for the failure.
# RERA registration a must: Every single project which has a carpet area of over 500 sq m or a minimum of eight units, will need to have RERA registration before it can be marketed. To obtain such registration, the developer must comply with all the mandatory guidelines set in the legislation.
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