If you’re a real estate developer or a brokerage company, you are probably well aware of what new regulations in the real estate sector feel like. But what is RERA, and how can it really be transformative for your company? The law changes the dynamics of realty markets, making them more transparent, responsible, and consumeroriented. But how do you take advantage of those changes?
In this blog, we break it down to what RERA regulation is, its key functions, the registration requirements, and penalties on non-compliance.
1. What is RERA and Why Was It Introduced?
RERA, the Real Estate (Regulation and Development) Act 2016, has been enacted to put an end to the lack of transparency and fairness in the market. In olden days of RERA, a buyer has faced problems in the form of delayed project deliveries, hidden costs, and poor-quality property. RERA has set down the objectives and made it its ambition to meet the needs that can be fulfilled through the protection of the interests of homebuyers and bring more efficiency and transparency into the market.
2. Essential Features of RERA Regulations
The RERA regulations have set several mandates and guidelines for developers and real estate agents. Some of its core features include:
a. Registration of Projects
Developers have to register their projects under RERA before they can be advertised or sold. In case of projects having more than 500 square meters of land, with eight or more units in that project, it is applicable. Each state has RERA authority and the builder has to provide every detail of the project to that authority, including timelines, layouts, and source of finance so that the project is genuine.
Registration facilitates verification: With bank facilities available, this registration ensures a buyer is not being duped about the status or legality of the project.
b. Project Transparency
It requires the developers to update the RERA authorities periodically regarding the project and post all the information on the website of RERA. It entails:
Completion status
Sales Number
Approvals received and pending
Status of construction
The transparency required by this makes the buyers feel more comfortable with respect to the time span for the project and the anticipated delivery time schedule.
c. On-Time Delivery
Delayed projects have been a common issue for homebuyers for a long time, thus causing inconvenience and financial inconvenience. RERA regulations strictly penalize developers who fail to complete the agreed-upon timelines. In case of delayed projects, the buyer has a right to interest on investment or even a refund.
d. Escrow Accounts
The other requirement is that a dedicated escrow account should be set for 70% of project funds. This avoids misuse of funds. The money should be used only for the construction of projects. Escrow ensures that developers do not divert funds to other ventures, which was characteristic of pre-RERA. Today, such delays in the delivery of the project are partly curbed.
e. Quality Assurance
The Act stipulates a five-year construction quality warranty. If there is a detection of defects in structure or quality within the first five years from the date of delivery, the developer has to rectify and correct them free of cost to the homebuyer. Such provision created a compulsive incentive for developers to maintain quality standards where previously it wasn’t.
3. Benefits of RERA for Homebuyers
More importantly, with RERA regulations, homebuyers now have increased protection and assurance; the most important benefits for the buyers are as follows:
a. Increased Buyer Confidence
RERA has increased buyer confidence by providing them access to project information. Buyers can better decide upon dependable data concerning the track records of developers, the status of projects, and the timelines.
b. No False Promises
False promises and misleading advertisements were prevalent in the past. Under RERA, developers are now compelled to deliver exactly what they promised at the time of selling, therefore, giving a buyer exactly what he has paid for.
c. Legal Recourse and Redressal
RERA regulations ensure that if any breach of contract or unfair practices are observed then the buyers can come forward and register their grievances against developers. Accountability has, thus improved by many folds. All the state RERA authorities have an adjudicating officer who deals with the grievances which most of the time get addressed soon.
4. RERA Impact on Real Estate Developers
RERA regulations, though have brought some challenges to the developers, have also paved the way for changes in the real estate market for the better:
a. Accountability and Credibility
RERA ensures strict compliance, as only those developers who follow ethical practices remain in the market. It has weeded out untrusted players, enhancing the credibility of the entire industry.
b. More Investment in Quality
Quality assurance with RERA mandate has forced developers to upgrade their construction standards leading to better project quality and customer satisfaction.
c. Financial Management Discipline
Allocation of escrow accounts and strict financial management practices have brought better uses of funds, streamlined the execution of projects, and ensured timely completion.
5. Problems and Limitations of RERA
Even though RERA has many advantages, it also has some challenges and limitations that inhibit its effectiveness:
a. Different Implementation Across States
There is a RERA authority formed by each state; therefore, the implementation is not uniform. Some states are proactive, while others have lagged, leaving it scattered throughout the nation.
b. Limited Scope
RERA applies only to residential and commercial projects that are undertaking more than eight units or a land parcel above 500 square meters. Smaller projects are entirely outside the ambit of RERA, thus leaving an accountability gap for such projects as well.
c. Enforcement and Compliance
Even though RERA is highly structured, it faces challenges regarding uniform enforcement across states. Developers often look for loopholes in the system and take advantage of such loopholes.
6. The Future of RERA and Indian Real Estate
Indian Real Estate Market has been much more buyer-friendly and transparent since the implementation of RERA. Going forward, the Act would be amended to expand its scope and see harmonization in its implementation across the states. The improvement is constant, and RERA is going to promote an industry centered on trust for customers, quality, and transparency.
Conclusion
Indeed, knowing the RERA regulations makes all the difference between a new and an experienced real estate investor. In the example given below, before investing in a project, find out if it is registered under RERA.
Whether a homebuyer or investor, RERA’s impact on Indian real estate underlines the notion that one should choose projects and developers as per their compliance, transparency, and commitment to quality.
Thus, RERA has marked the beginning of an even more stronger and reliable industry and has transformed the realty business into an industry where buyers and developers can move forward with trust and integrity.
Emerald Developers has kept to the standards, with all the projects it undertakes, being transparent, timely, and of excellent quality. Our commitment to transparency through RERA compliance brings a sense of peace of mind among our esteemed buyers regarding accountability, clear communication, and more, with every investment with Emerald Developers.
Explore the trusted RERA-registered properties at Emerald Developers that stand up to your standards of excellence.
