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How does RERA benefit Buyers?
Real Estate Regulatory Authority (RERA) Act was launched on the 1st of May 2017, and is aimed at protecting the interests of buyers in the real estate sector and to establish an arbitrating mechanism for speedy dispute redressal. It is an act to create a mechanism that effectively regulates and addresses issues like project delivery delays, property pricing, quality of construction, title and other changes; in an efficient and transparent manner.
Here are few ways in which buyers are likely to be benefitted by the RERA Act:
Builders won't be able to delay the projects
Under RERA, not being able to get possession of apartments from the builder won’t be a problem anymore. Developers who default the delivery date will be required to pay an interest rate of 2% above State Bank of India's lending rate to the home buyers. This is aside a possibility of imprisonment of up to three years.
Builders won't be able to charge for the excess area
Earlier, builders used to charge for the built-up and super built-up area. This means if the buyer paid for 1,300 sq.ft., they would only be able to use the carpet area of around 900 to 1,000 sq.ft. This is the net usable floor area of an apartment that only included the internal walls. While, the rest of the area was covered by the external walls such as lobby, service shafts, balconies, open terrace, balconies, common spaces, etc. Under RERA, ‘carpet area’ has specifically been defined. Selling of property based on super built up area has been prohibited and can only be sold based on the carpet area. Additionally, developers will also require consent of two-thirds of the buyers in a project before changing project's design or any other structure.
Builders will be held responsible for any defect in the construction
The quality of the construction has been a concern for many buyers. Under RERA, any structural defect that takes place to the property for up to five years from the date of handing over possession will have to be repaired by the developer. It shall be the duty of the promoter to rectify such defects within 30 days without further charge.
Builders won't be able to use your money for some other project
Untimely delivery of real estate projects has been the biggest bane for the buyers. According to economic times, almost all projects launched between 2010 and 2013 had defaulted their delivery time primarily because funds were diverted to new projects by the builders. However under RERA, the developer will be required to transfer 70% of the money received from buyers to an escrow account. Post which, the money will be withdrawn as per the stage of the construction, that will be approved by engineers and chartered accountants of builders.
Grievances will be resolved addressed and solved quickly
Under RERA, regulatory bodies and appellate tribunals will be set up in each state to solve builder-buyer disputes. Any person aggrieved by any direction, can expect a resolution from the appellate within 120 days.
Builders will need all clearances before selling
Earlier, builders often sold projects that did not have all clearances, causing many problems for the buyers. Under RERA, builders and agents will have to register themselves with the regulator, disclose every detail about the project and will be able to sell projects only after the necessary clearances have been attained.
No more false promotions. What you see is what you will get
Earlier many developers promoted their projects with false commitments and offers. However, under RERA each advertisement will have to carry the RERA registration number, and all the promotions or advertisements will have to be completely honest without any false commitments.
To conclude: It is mandatory for all builders and agents to register with the RA (Regulatory Authority) after its establishment. They will also be required to register their projects along with all the information including, financial statements, copy of legal title deed and other documents. Post which, they will receive a project-wise registration number.
Therefore, make sure you buy a project which is registered with the regulatory authority!Give us a call to learn about all our loan products and financial advisory services to help you fulfill your dreams!
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