What is RERA?
Real Estate Regulatory Authority (RERA) was established under the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as “Act”), The said Act has been enacted to regularise the real estate industry, to boost real estate investments and to protect the interests of home buyers. The Act makes it mandatory for each state and union territory, to form its own regulator and frame the rules that will govern the functioning of the regulator.
Reasons for enacting RERA,2016:
- Real Estate and housing sector was left unregulated although COPRA (Consumer Protection Act),1986, was available but experience showed that it was inadequate to address the need of the homebuyers and promoters in the real estate sector. Hence, the enforcement of a separate legislation dealing in such types of cases was required.
- The need for RERA was felt to establish an oversight mechanism to enforce accountability upon the real estate sector and providing a speedy dispute redressal mechanism as well as to safeguard the investments made by the home – buyers through legislation.
Objectives of RERA:
- Greater accountability towards consumers.
- Reduction of frauds and delays.
- Reduction in high transaction costs.
- To balance the interest of consumers and promoters by imposing certain responsibilities on both.
- To bring transparency of the contractual conditions.
- To set minimum standards of accountability.
- Fast- Track dispute resolution mechanism.
- To induct professionalism and standardization in the sector.
- To pave way for accelerated growth and investment in the long run.
Benefits of the RERA Act, 2016:
- The projects are statutorily regulated.
- Attaches certain authenticity with regard to completion of the project.
- Imposes statutory obligation on the developer and home buyer to abide by the terms and conditions of the home buyer’s agreement and statutory compliance to the mandate of law.
- Project approved under the RERA Act, 2016 helps promoter to raise funds from the banks and buyers also express their satisfaction in approved projects which is beneficial to homebuyers, promoters, and real estate agents as well.
Important features of RERA,2016:
- Establishment of Real Estate Regulatory Authority in every State and Union Territory.
- No Promoter can advertise, book, sell or offer for sale, without registration with RERA.
- No Agent can sell a project which is not registered with RERA.
- The promoters to give the regular updates of the project to the homebuyers.
- RERA prohibits developers from making any amendments to the sanctioned plan of the project, without the prior consent of the home buyers.
- If the allotees or promoters file applications in front of the appropriate authority for a remedy, then the authority has been given sixty days to dispose of the applications and it can be extended provided the reasons are recorded for the delay in the decision.
- Real Estate Appellate Tribunal is the appropriate forum for appeals.
- It is now necessary for the promoters to set aside 70 percent of all project receivables into a separate reserve account and such amount shall only be utilised for the cost of construction and land cost of that project.