The government has adopted the Real Estate (Regulatory and Amendment) Act of 2016. Its effects on real estate and real estate parties would be interesting. On Rajya Sabha’s suggestions, the Act has been amended in 20 important ways. All of these changes are meant to increase buyer interest and transparency in the real estate market. To achieve one goal, several changes will work in different ways. Let’s see how various amendments of RERA can clean up India’s real estate business:
- Quick Deliveries: The major goal of RERA is to close the loophole in India’s real estate business that allows for late delivery. Most buyers are afraid to invest in real estate because their money is locked up in houses for years. With a regulatory agency in place, this Act wants to speed project completion and rebuild investor confidence. The grievance redress procedure has also been improved, with a grievance being resolved within 60 days so that work can continue as quickly as possible
- Compulsory Registration: Builders will be asked to register all projects reaching greater than 500 sq m. Previously, the limit was 1000 sqm. However, lowering the restriction to 500 sq.m means that more projects will be covered by the Act, increasing its reach. Previously, registration was not required, and the majority of the unorganised sector did not register their projects, allowing black money to grow. Along with registration, the builders should now provide online details of the property, it will be accessible to the general public. The system will become more transparent as a result of this.
- Escrow Account: Builders would be required to escrow 70% of the sales profits including the land cost, in a separate account. This will prevent money from being diverted and motivate the job to be completed quickly. Before, builders would use funds obtained for one building to start other ones. As a result, the project’s completion was pushed back. However, because of the escrow account, builders will be unable to make new investments, resulting in a general slowdown in the market. New investments will not be possible until the current project is completed.
- Carpet Area: In the Act, the carpet area is precisely defined. Builders or promoters will no longer be able to put extra places in the carpet area that consumers are unaware of and charge a higher price.
- Punitive Measures: The fines for failure to cooperate with the Act have been increased. Previously, the builder might face three years in prison, but now he might face seven years in prison and a fine of 25% of the fair market value of the property in question if he violates the act. This Act aims to protect the interests of innocent buyers by putting tighter regulations on builders.
- Transparency: The basic purpose of this Act is to increase confidence and transparency in India’s dirty real estate market. To do this, the builder must get approvals from all relevant authorities before beginning work on a project. In this approach, the builder will have little opportunity to mislead innocent buyers, and satisfied customers will have more faith in the system. However, in order to achieve one goal of transparency, the other goal of completing projects quickly would be defeated, because getting all of the approvals takes time, and the project won’t start until all of the approvals are in place.
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