RERA – What it means for the Property Developers

RERA – What it means for the Property Developers

RERA or Real Estate Regulation Act, 2016 can be seen as India’s real estate sectors the first regulator, legislated by the parliament in 2016. RERA attempts to deliver transparency and ethical practices that would guard the interests of buyers and also inflict punishments on erring contractors. 

As per RERA, every state and union territory will have its own regulator and set of laws to direct the purpose of the regulator. Centre has outlined laws for union territories also covering the national Capital. RERA tries to address issues like delay, price, quality of construction, title and other changes that are part of the real estate business in the country.

Obstructions in projects are the biggest concern faced by buyers. The causes are manifold, and the impact is enormous. For the last ten years, several projects have seen delays of up to seven years. Schemes launched after the turn of this decade have also encountered delays. Some had run into obstacles even before the brick got laid.

The causes, therefore, being a diversion of funds to other projects, shifts in management by professionals, the environment department, national green tribunal, etc. and other organisations like those associated with infrastructure construction and governing transport. In many places, land purchase becomes an issue. Straying builders often sell plans to investors without the permission of plans, an unauthorised jump in FAR, bad quality of construction, projects held in a lawsuit, etc.

RERA for Real Estate Developers

• To strengthen the accountability towards customers, the RERA has ordered real estate developers (also called real estate promoters) to register the plan (averaging more than 500 square meters or larger than eight apartments) and get a legitimate registration number before proceeding for action. He/she cannot market, promote or trade the units before the record of the project. If the project requires completion in phases, then the developer has to take registration for each stage individually.
• The developer must present all the necessary documents related to the project as prescribed by RERA. It is obligatory for a real estate developer to start an escrow account in a bank identified by the government and must save 70% of the total payment taken from the buyer. He/she can take out the money and should only use it for the development of the announced project following consent from an architect, engineer, or a chartered accountant.
• If the developer fails to work as per the directions or violates the rules directed by the Appellate Tribunal or RERA then, he/she shall face imprisonment up to three years with a penalty of up to 10% of the total estimated cost of the project in question.

Prerequisites of RERA

• Before purchasing the plot, promoter/developer/builder must check the history of the dealer and the property
• Do the market research, cost & profit review, risk analysis, and financial research before planning a project
• Enrol a reliable investor or financing firm and keep yourself up to date with the trending posts to make best finance deals
• Select ambitious experts who comprise businesses executives, property expert auditor, builders, engineers, topographers and so on
• Designate a likely plan management company or a trustworthy project engineer to guide you in expanding the plan
• Collect all the requisite approvals, sanctions, NOCs, etc. to be on a protected side
• Do a survey of existing businesses, forthcoming investments, competitors’ projects & prices, review of the city where you are going to begin the project
• Value your property correctly and hire distinguished real estate agents for an impeccable marketing of your property
• Ignore averting funds received for the stated project. It will block the project and will hinder your respect
• Develop a decent floor plan and share all the required details with clients
• Avoid making bogus promises and cutthroat business attitude
• Fulfil your commitment while selling the units