Dr Girija Vyas, Minister of Housing and Urban Poverty Alleviation, introduced the Real Estate (Regulation and Development) Bill RERA, 2016 in 2013. In 2015, the Indian Union Cabinet approved 20 important changes to the Bill based on Rajya Sabha suggestions. It was then finally adopted by the Rajya Sabha and the Lok Sabha on March 10th and 15th, 2016, accordingly, and became an Act in May 2016
What Is RERA?
The goal of RERA is to develop a regulating authority for the real estate industry. The Act’s major goal is to protect buyers’ interests and support quick delivery of properties or projects. To do this, projects occupying more than 500 sq. ft. of land or having at least eight flats must be registered. The builder, or “promoter,” will be required to display project details online, and this information will be open to the public. Previously, builders would include unnecessary areas in the carpet area and charge buyers 20-30% more than what the actual carpet area would have cost.
The unaware buyer used to pay the requested money as well. The RERA specifies the carpet area to prevent clueless customers from falling victim to the promoters’ tricks. Upon that, promoters would be forced to maintain 70% of the money collected from buyers in a separate escrow account, with the money only being used for the development of the project for which the money was paid. This would not only ensure the project’s rapid development but will also stop promoters from misallocating funds. Last but not least, before beginning a project, promoters must receive necessary approvals from all relevant authorities.
TRAI, RBI, SEBI, IRDAI, PFRDA, CBFC, FIPB, FSSAI, and BCCI are the regulators for the telecom, banking, stock markets, insurance, pension, film, FDI, food, and cricket industries, together. However, the sector that contributes the third-largest share of GDP, attracts the majority of our investments and is the source of black money and corruption is strangely unregulated. The industry in question is real estate, where billions of dollars and crores of rupees are exchanged. Buyer pays unexplained cash to reduce the registration amount and hence stamp duty, while seller seeks cash to avoid taxes. The use of black money in realty transactions creates a win-win situation for both parties. In real estate transactions, the usage of black money produces a win-win situation for both sides.
RERA tries to reduce all of these issues by making transactions more transparent. Compulsory registration and display of property facts will help to bridge the trust gap in the real estate business and increase transparency. Additionally, on-time project delivery will raise demand. People are currently afraid to invest in real estate since projects take years to finish and their money is locked up. Demand is predicted to rise as a result of RERA’s guarantee of on-time project delivery, resulting in a fall in inventory levels.
High inventory is currently one of the reasons behind high costs. When inventory falls, prices fall as well, causing demand to grow even higher. In short, the real estate cycle will run smoothly and in a balanced manner, with inventories, prices, supply, demand, and interest rates all following each other!
Need hassle-free RERA Services?
MeraLegal will assist you in obtaining all appropriate licenses and registrations of real estate projects and agents; please click on the following link to contact one of our consultants.