The journey of buying a home is one of life’s most significant decisions. However, for many homebuyers in India, the process has often been fraught with challenges such as project delays, lack of transparency, and unfulfilled promises by builders. To address these issues and protect homebuyers, the Indian government introduced the Real Estate (Regulation and Development) Act, 2016, commonly known as RERA.
In this article, we’ll explore the key aspects of RERA and how it has transformed the real estate sector to safeguard homebuyers.
What is RERA?
The Real Estate (Regulation and Development) Act, 2016, is a landmark legislation aimed at bringing transparency, accountability, and efficiency to the real estate industry in India. It establishes a regulatory framework that governs residential and commercial projects while ensuring the protection of homebuyers’ interests.
Under RERA, each state and union territory in India has its own regulatory authority to oversee real estate transactions and resolve disputes.
Key Features of RERA
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1. Mandatory Registration of Projects
RERA mandates that all real estate projects exceeding a specific land area (500 square meters or more) or involving more than eight apartments must be registered with the respective state’s RERA authority. Builders cannot advertise, sell, or promote a project without registration.
2. Project Transparency
Builders must disclose vital information about the project, including layout plans, construction progress, and approvals, on the RERA website. This allows homebuyers to access accurate and up-to-date information before making a purchase.
3. Protection Against Delays
RERA ensures that builders adhere to committed deadlines for project completion. If there are delays, buyers are entitled to compensation or a refund with interest.
4. Utilization of Funds
To prevent builders from diverting funds, RERA requires them to deposit 70% of the total project funds in a dedicated escrow account. This money can only be used for the specific project for which it was collected.
5. Clear Agreements
Builders must sign a standardized sale agreement with buyers, clearly outlining terms such as possession dates, construction timelines, and penalties for delays.
How RERA Protects Homebuyers
1. Ensures Timely Delivery
Before RERA, project delays were a common issue. Now, with strict regulations and penalties for non-compliance, builders are motivated to complete projects on time.
2. Increases Transparency
RERA eliminates ambiguity by providing buyers with all necessary information about the project. This transparency helps buyers make informed decisions.