What is RERA (Regulation and Development) Act of 2016? How does it affect the Real Estate industry in India?
What ia RERA Act
The RERA or Real estate regulation and development act is basically an initiative that intends to protect the interests of home buyers and promote transparency in real estate. It actually decides how it will affect various stakeholders that include from home buyers, builders to brokers and definitely the provisions and penalties prescribed under the act. The RERA aims at protecting the interests of home buyers while boosting investments in the real estate sector. It was first introduced back in the year 2013 but due to objections raised in the parliament, it came into effect only in May 2016.
Some key highlights of RERA
- Home buyers for many years have protested that the real estate transactions were not up to the required standard and supported of the developers. RERA's model code in reality aim to create a more equitable and fair transaction between the seller and the buyer of properties, especially in the primary market.
- It is hoped that RERA will make the real estate purchase easier and smoother. This can be done by bringing in better accountability and transparency, provided that states do not dilute the provisions and the spirit of the central act.
- The Real Estate Act makes it mandatory for each state and union territory, to form its own regulator and frame the rules that will govern the functioning of the regulator.
- The most interesting as well as positive aspect of this act lies in the fact that it provides a unified legal regime for the purchase of homes and seeks to standardize the practice across the country.
- According to the central act, every real estate residential project in case of where the total area to be developed, exceeds 500 sq metres or more than 8 apartments is planned for the future, must be registered under the individual RERA of each state. The existing projects where the completion certificate or occupancy certificate has not been issued are also required to comply with the registration requirements as per the act.
The impact of RERA on real estate industry is undeniable. Initially, a lot of work is to be done to get the existing and new project registered. Details that include status of each project executed in last five years, details of the promoter and detailed execution plans along with many other things need to be prepared. RERA is solution to many disputes and also lays the ladder to its success, will depend on the timely setting up of these new dispute resolution bodies and how these disputes are resolved expeditiously with a degree of finality. The developers who still have under construction projects may face difficulty due to RERA. As per the Act, all the projects under construction have to register now first with the regulatory authority before moving further in completing the project. At present, the developers are postponing their new launches in order to understand the impact of RERA act and focus more on completing the existing projects. This means that there will be fewer projects coming up.