RERA Act: The Biggest Boon for Real Estate Investors

Over the past few decades, the Indian real estate market has witnessed a huge boom, leading to the emergence of several real estate hotspots in the country. Nowadays, more and more people are considering real estate as a preferred investment avenue, as it not only offers lucrative ROI but also helps diversify the investment portfolio while minimising risk. Earlier, there were no set standards in the real estate market, and almost every other developer followed their own norms. Additionally, instances of delays in project handovers, though not commonplace, were still a worrisome aspect of real estate investment. The Real Estate (Regulation and Development) Act or RERA Act of 2016 was a significant step taken by the Government of India in a bid to regularise the unorganised real estate sector. The RERA Act regulates the real estate sector across all states of India.

To understand the significance of the RERA Act, it is first crucial to understand what RERA is, what is a RERA-approved property, and so on.

What is RERA?

The Real Estate Regulatory Authority, commonly known as RERA, came into being in 2016 as per the Real Estate (Regulation and Development) Act with an aim to contain the rising real estate prices, to safeguard the interests of homebuyers and real estate investors, and to bring transparency to the real estate market. RERA has implemented several reforms in the industry, since its inception, and has many more in the pipeline. The act was passed in the Indian parliament in March 2016 and implemented on May 1, 2017. According to this act, every real estate project with a land area of more than 500 square metres needs to be registered with RERA before it is launched. For a property buyer or even a builder, having knowledge about the rules and guidelines of RERA makes it easier to navigate the real estate market.

Benefits of RERA

Some of the key advantages of RERA-registered projects:

  • Advance: According to the RERA Act, a developer or builder cannot take any more than 10% of the cost of the property as an advance or as an application fee (whichever the case may be), before the two parties have entered into a sales agreement.
  • Lower Risk of Builder Insolvency or Bankruptcy: Builders are liable to deposit 70% of the amount realised for the project into a separate bank account, from which they will be allowed to make a withdrawal only for construction or land-related expenses for the specific project.
  • Timely Possession: In case of delays in project handover, penalties are to be imposed on the builder or developer. The rate of interest to be paid, either by the builder to the buyer in case of default in completion of a project, or by the buyer to the builder in case of default in payment, shall be the same for both parties.
  • Faster Grievance Redressal: RERA has established state authorities with structured processes for grievance redressals.
  • Structural Defect Liability: If a buyer discovers any structural defect in quality, provision, service, or workmanship within 5 years of getting possession of the property, the defect will be rectified by the developer within 30 days at no extra cost. If a developer does not comply with the same, the buyer will be eligible to claim compensation for it.
  • Right to Information: Throughout the development stages, the buyer has the right to know all important project information, including the execution, layout, and status of the project.

What is RERA Registration?

One of the first things that any property buyer should look for in a real estate project is the RERA Registration or the RERA certificate of the project. All real estate projects that are registered with RERA are provided with a legal document or certificate, which has a unique registration number. Any builder or developer is not allowed to do any advertising, sales, or bookings for real estate projects without first obtaining the RERA Registration. Apart from the unique registration number, the certificate also includes all the important information about the property, agent, and developer.

For RERA-registered projects, the certificate’s salient features include:

  • Increased builder credibility.
  • Providing clear information about the real estate project or property.
  • Ensuring developers follow the rules and guidelines specified by the RERA Act.
  • Reducing risks of malpractice.
  • Safeguarding the rights and interests of property buyers.
  • Providing access to the RERA complaint tribunal for the buyer as well as the developer.
  • Ensuring pan-India standardisation.
  • Creating a sense of responsibility for developers as well as buyers.

RERA Registration Process

The process for RERA registration is overseen by the state authorities under RERA and so, may vary from state to state. The entire process is online, beginning with the application filing, which can be done from the official website of the state where the project is located. The basic procedure for the registration includes the following: -

  • RERA registration form filing.
  • Submission of requisite documents along with the application.
  • Registration fees is to be paid by way of a demand draft, banker’s cheque, or via online payment.
  • The application is either accepted or rejected by the authority within 30 days of receipt of the application form. In case there is no revert after 30 days, the application will be considered accepted.
  • Finally, the RERA Registration Certificate is issued for the project.

RERA has significantly helped standardise and regulate the real estate market of India, bringing a lot of stability and transparency into all transactions. Ensuring that you only invest in RERA-registered projects is essential for making a good property-buying decision.