How RERA is Beneficial to its Stakeholders: Home Buyers, Builders, and Government

How RERA is Beneficial to its Stakeholders: Home Buyers, Builders, and Government




This article is written by Vibha Aggarwal, haunting a Certificate Course in Real Estate Laws from LawSikho.com . Here she discusses ” How RERA is Beneficial to its Stakeholders: Home Purchaser, Builders, and Government “.

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Real Estate( Regulation and Development) Act, 2016( RERA) the landmark legislation, came into existence on 1st May 2016 in order to boost assets and to protect and safeguard the interest of homebuyers against the unfair trade malpractices of the builders.

The key objective of the Act is to bring greater transparency, accountability, financial discipline, immediate redressal of disputes and protect home purchasers by creating a positive ecosystem.

It follows the principle that the buyer is the king and the builders will have to ensure compliance to avoid beating.

Under RERA, the Home Buyer is a King, How?

The introduction of RERA has resulted in a better-regulated system is beneficial to all the stakeholders. The powers& regulations explicitly safeguard the home purchasers from prevailing malpractices in the real estate sector. The Primary objective of RERA is to protect home customers& create an eco-system wherein they get peak be able to use this Act

Benefits of RERA to Home Buyer

Right to Information/ disclosures

One of the prime advantages of the RERA to the buyer is that before investing in property the buyer now has the full liberty to information about the builder and their projects. Post RERA, the make is responsible for sharing all the relevant information with the purchasers. This includes: intentions related to layout, executing program, stage-wise completion status, government approvals, period status, etc. Not exclusively the project information is available but also once the developer gets registered with RERA, the buyer can access all the information about the builder -such as previous track record of the make, financial status, litigation if any, prospectus with all the details of the property, etc. thereby ensuring transparency.

Buyers can access the details by calling and checking the respective regime RERA’s website and can be now more self-confident before investing their money in any project.

Also, under the Act, citizens have the right to ask for information related to any developer/ campaign. The above requirements enables all our citizens to raise issues pertaining to the real estate sector.

MahaRERA received a number of applications from the citizens striving information under the Act.

1st May 2018 to 30 th April 2019

Number of lotions received by PIO/ APIO seeking report under RTI

456

Number of applications for which knowledge has been provided by PIO

451

Number of an employment pending with PIO

5

Number of appeals filed before the First Appellate Authority against the order of PIO

52

Number of petitions which have been disposed of by First Appellate Authority

52

Number of pleas pending with First Appellate Authority

0

Number of employments/ petitions not disposed of in the contracted time frame

0

Source: MahaRERA Annual Report 2018 -2 019

Standardized Carpet Area

Before RERA, “they dont have” standard formula for the computation of the carpet area, given the absence of any defined guidelines the developers use to inflate the carpet area which help increase and shoots up the cost of the property.

Post RERA, there is a standard formula for the purpose of calculating the carpet area; therefore the makes would not be able to manipulate the same.

Rate of interest on default on payment

Prior to RERA, in case of the default value in fee by the buyer to the builder or in case builder retardations the possession, the interest rate paid by the builder to the buyer was less whereas the rate of interest paid by the buyer to the builder for default in remittance was higher.

After RERA implementation, the interest rate shall be the same for any of the defaulting parties.

Advance Payment

Prior to RERA, homebuyers had to pay advance payment as demanded by the builder; there was no cap on it. Now the developer can’t demand more than 10% of the cost of the property as betterment or lotion costs before entering into the agreement.

Reducing the risk of developers insolvency/ insolvency

Many developers tend to have multiple projections who the hell is being constructed and developed at the same time simultaneously. Earlier, the developers can use the funds heightened from one job for any other project, to move to a lack of funds. There have been cases where the makes caused the funds from the home customers to construct their quality but expended the same stores in other projects/ other purposes. They later become bankrupt and were not able to complete the construction of the owned for which the funds were received from the home buyer.

Since RERA implementation , now the builder has to open a project-specific bank account and situate 70% of the amount collected from the potential purchasers of that project in this account. The make can withdraw the funds merely for the specified project for which the funds were raised and shall be in proportion to the completion of the project after being certified by a civil engineer, inventor and a chartered accountant in practice.

This will too ensure the timely attainment and delivery of the projects, as before lack of funds was a common condone by the builders for the wait of the projects.

Right of the buyer in case of incorrect commitments/ predicts

In case of any imbalance/ difference between the commitments/ promises made by the builder and the actual property, the buyer, in such cases, has the option to withdraw from the project and will be entitled to a full pay of the amount paid in advance or otherwise along with the interest and claim compensation.

Right of the buyer in case of the error after owned

The buyer would be entitled to rectification of errors free of cost in case of any structural flaws, any flaw in handiwork or in tone, assistance or proviso, within a period of 5 years from the date of the possession. Any such flaws would be rectified within a period of 30 dates once the errors are detected.

If the developer fails to carry out the mends within the guaranteed term, the purchasers can claim compensation for the same.

Right of the buyer in case of postpone of possession

If the builder fails to deliver the possession of the asset on the due date, then the buyer has the following options paper 😛 TAGEND

To is removed from the project, wherein the purchasers will be able to a full refund along with the interest from the due date of ending till the amount is refunded. To continue with the project until the successful completion, wherein the buyer will be entitled to compensation along with interest payable from the due date of attainment of the project till the project is actually completed.

Right of the buyer in case of a flaw in name

If any time after the possession of the property, the buyer finds that there is a defect in the entitlement of the property then the buyer can claim compensation from the builder.

It is even “not disallowed by limitation” which wants there is no time frame within which such claim has to be made.

Setting up of an Authority for grudge redressal

A common grudge that is faced by most customers is the delay in possession or no completion of such projects. Before RERA, the buyers did not have any redressal mechanism apart from the regular go spending legal framework.

Post RERA implementation, the buyer can now approach the respective State Authority set up under RERA. If the buyer is not satisfied with the degree passed by the State Authority, a complaint can also be filed or an appeal can be made with the Appellate Tribunal which will redress the instance within 60 daylights and in case of failure to do so, it shall record the reasons of such outage or be extended with the reasons of delay.

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The Tables below shall be specified in complaints received by the MahaRERA Authority

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Number of Cases pending with the authorities concerned at the beginnings of the year

Number of cases received during the year by the Authority

Number of Cases disposed of by the Authority

956

4490

2945

Source: MahaRERA Annual Report 2018 -2 019

RERA increases builder` s credibility, How?

The Act also has adequate requirements to safeguard the builders from the buyers who intentionally retard the due remittances and/ or not taking possession of the property after receiving a completion certificate. Too, RERA heightens the credibility of registered makes which assistances them in securing investments/ finances.

Benefits of RERA to builders Boost Buyers/ Investors Confidence and Investments

Due to RERA, the purchasers/ investors can check the details of the builder and their projects on the respective state RERA website which will revive the faith of the purchasers/ investors on the makes which in turn will improve their confidence in real estate sector and increase the investments.

The establishment of a regulator will also result in the increase of foreign investments which will give a boost to the overall sector.

Example 😛 TAGEND

The MAHA RERA Authority began an online registration process from 1st May 2017. In total 20,560 activity registrations have been granted as on 30 th April 2019. Of these 4372 Project Registrations have been granted between 1st May 2018 and 30 th April 2019. The distribution of the same month-wise is as follows 😛 TAGEND

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Source: MahaRERA Annual Report 2018 -2 019

The distribution of total 20,560 activities by status of period is as follows. Of total 20,560 projects were registered as on 30 th April, 2019 and 7,579 jobs were new projects.

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Source: MahaRERA Annual Report 2018 -2 019

In Maharashtra, the Real Estate Projects are distributed as follows territory intelligent 😛 TAGEND

general

Source: MahaRERA Annual Report 2018 -2 019

Transparency

With the RERA being into existence, the builders will take tolerable care in uploading the details of the projects on the respective territory regulatory websites, which will increase the transparency in the marketing and execution of such projects. Because of the increased level of clarity, the speculation proportion will be improved in the real estate sector.

Certification of Authenticity

Post RERA , no one can question the unity of the builders as RERA will provide credentials simply to genuine and authentic builders.

Visibility to genuine builders

Genuine makes will get visibility of employ. The number of projects launched will be low post RERA implementation; nonetheless honest developers who are known for the timely delivery of the projects will gain the benefits from this situation and the unreliable builders who mislead the innocent purchasers and investors will be out of the market. Genuine projects under reputed and honest developers will increase in the market creating lesser but healthy rival. This will help reliable makes and terminate unorganized builders who thrive on innocent purchasers/ investors.

Increased price to the builders

One of the impacts of the RERA is that with the increase of cost of compliance for the builder berth RERA, the builder will get a higher price from the buyers as the builder’s compliance cost shifts to the buyer.

Lower Equity Cost

Due to a lack of trust amongst the lenders towards developers, the builders end up taking a huge amount of credits at a very high rate of interest. Once the real estate schedule is organized post RERA implementations, Private Equity Players, Banking, and Non-banking Financial Fellowship will not hesitate in funding projects presented by the developers which are genuine by nature. Builders having all the requisite permits spot it easy to get their projects provide funding for these lenders. This will, in turn, lower the equity cost and lessen indebtedness for the builders.

Purchaser accountable for a breach of agreement and delay in payments

The builder has the right to approach the regulator in case there is any dispute with the buyer. In case of any breach of the builder-buyer agreement by the buyer, the make can hold the buyer accountable for the same.

In case of delay in pays by the buyer to the builder, the developer can claim interest and also file a complaint against the purchasers for the non-payment with RERA. If the purchasers starts a third-party interest without informing the builder, the builder can also take legal action against the buyer.

Reduction in Fly by Night Realtors

As per the RERA settles, builders have to invest 70% of the amount collected from the consumers in the schemed programme thus there will be very little scope of pre-investing in upcoming programmes. This will reduce the number of Fly by Night realtors and the added advantage of reputed builders who do their business unambiguously will increase.

Timely owned of the property

Under RERA, the buyers are liable to take possession of their quality within two months of receiving the Occupancy Certificate and cannot braced the developer obligated for any further delays on their part.

Robust grudge redressal method

Post RERA implementation, the disputes between the buyer and the builders can be resolved instantly within a specific time and the builder can also appeal against a RERA order received against him.

Post RERA, with negligible authority participate and the easy unionized process, constitutes it quite effective for the builders.

RERA Benefits for Government

The whole purpose of Government formulating a brand-new Ordinance is to bring the regulatory system in place. RERA is one such Act that benefits the government in various ways.

The Government through RERA can settle the real estate sector through its rules& regulations thus converting a hugely unorganized sphere into the organized area. This hugely benefits the Government in sector-specific policy formulation, an authentic database of real estate sector economy and creation of a translucent structure that boosts investor’s confidence.

Under RERA, the Government is able to collate an authentic database of such investments& revenue generation from the real estate sector. This information is very useful in formulating future programs& budgetary allocations for the financial development of the country.

The real estate sector is one of the biggest sponsors to GDP. With the implementation of RERA, dominating corrupted practises in the real estate sector like black money deals, lower stamp duty remittances, unknown sources of investments, etc. which results in a receipt loss for Government have been vapid out. Now the Government has a very reliable source of revenue generation.

Unemployment is a very serious issue faced by our country. After agriculture, it is the real estate sector that furnishes employment to a large population. RERA improves the Government to create a transparent system, boost speculations and create a positive environment for real estate development. All this could be used for creating better& bigger employment opportunities for skilled, semi-skilled& unskilled labor force of the country.

Housing for all- One of the most pressing needs India is facing is providing housing to all its own population. The only way to achieve the goal of housing for all is by accelerating the growth potential of the real estate sector by making a reliable& asset friendly area.

Conclusion

Within a very short period of its implementation, RERA has been successful in creating a common platform beneficial to the buyers and the developers. Also, the overall image of the real estate sector has undergone some positive developments. One has to be noted that the number of brand-new projection launches has decreased , now makes are focusing more on a single project and delivering it on the promised due date. Also, it has considerably eliminated the bogus/ chisel builders engaged in corrupt practices as they find it very difficult to comply with the inflexible regulations under RERA.

Though the Act has mostly been implemented by the state governments, there are serious dilutions by some governments, which are hampering the very force of the Act. The Act eliminates projections having fewer than 8 groups; developers may employ this provision for their benefit.

It is a well-known fact that however good the Act is, it’s the implementation of Act which ascertains its success. Now the government has to ensure that people are made aware of their rights& responsibilities under the Act by organizing regular awareness campaigns and capacity building programs.

As it is said “Justice Delayed is Justice Denied”, but over the years it has been observed that “delay injustice” certainly weakens the trust of the general public in the justice delivery system. Therefore, RERA authorities have to make all possible efforts to see that each and every quarrel is resolved within a specified framework of time. The success of the Act would heavily depend on the time-bound justice delivery in all the disputes.

Students of Lawsikho routes regularly cause writing assignments and work on practical exercisings as a part of their coursework and develop themselves in real-life practical skill.

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