Late delivery and a high inventory rate define Indian real estate. According to data, 25% of properties in India are behind schedule, with an inventory of more than 14-15 months. Developers’ carelessness creates a spiral in which high prices chase low demand, leading to an industrial crisis and creating the road for illegal, corrupt, and dishonest acts in the real estate market. With almost 76,000 businesses, the real estate industry should have already had a regulating agency and a solid legal aid system in place. Although the Telecom Regulatory Authority of India (TRAI) controls the telecom sector in India, which is ruled by a few major telecom players, there was no such protector for the real estate sector until the government introduced the Real Estate (Regulation and Development) Act (RERA) on November 1, 2016. The sector has great expectations now that RERA is in effect.
Here’s what RERA has planned.
- The Section 20 Act promotes the establishment of regulatory bodies (Real Estate Appellate Tribunals) within one year of the law’s implementation. These regulating authorities would consider both buyer and seller complaints and make a decision within 60 days. This will encourage the settlement of disputes as quickly as possible.
- In the Act, the carpet area has been revised. Previously, promoters would add stairs, common passageways, and other places that were 20-30% larger than the real flat’s area, and purchasers would not question it because they were unaware of the carpet area. It is now required to indicate the exact carpet area.
- All projects with more than 500 sq. m of land or at least eight flats, including those that have not yet received a completion or residence certificate, must be registered. The developer, who is referred to as a Promoter under this Act, will be needed to submit a new application for each project’s registration. After that, he must provide all of the information on his website on the Authority’s website. These details would be accessible to the general public, increasing transparency and confidence.
- The builder would be asked to put 70% of the money collected from customers into a separate escrow account that could only be used for the project. This will prevent construction companies from transferring funds from one project to another.
- During the booking and issue of the allotment letter, the promoter should share information such as approved plans, along with requirements accepted by the authority, a stage-by-stage schedule of the process’ completion, and provisions for civic infrastructure such as water, sanitary, and electricity.
- If the project is built on leasehold land, the promoter is responsible for obtaining a lease certificate stating the duration of the lease and proving that all leasehold land dues and taxes are already paid.
- Unless he delivers physical ownership of the property to the allottees, the promoter is liable for all outgoings, including land costs, ground rent, municipal or other local taxes, water and electricity fees, maintenance fees, mortgage loan, interest on mortgages, and so on. If the promoter fails to pay all or some of these expenses, he will be held liable for them even after the property has been transferred. He would also pay any penalties imposed as well as any legal fees spent if a legal proceeding would need to be started.
These are only a few of the many advantages that the Act gives. The act’s key benefits to buyers include after-sales services from the promoter, a separate bank account for each project, a defined carpet area, proper project specifications, and timely delivery of flats.
Yet, the Act has certain flaws, such as the fact that it is not retrospective and that there is no necessary regulation for premises with less than 1000 square meters. Because a project cannot begin until all permissions have been obtained, which takes time, the projects may be delivered late, which is opposite to the Act’s goal.
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.