How Does RERA (Real Estate Regulatory Authority) Impact Buyers

Purchasing a home is a cherished dream for many individuals. Unfortunately, this dream is often rendered unachievable with the soaring real estate prices, especially with the income-aspiration ratio imbalance. Earlier, developers and builders operated under their own rules and norms, lacking standardized practices. This resulted in differences between builder and buyer agreements.

This lack of a uniform structure left homebuyers vulnerable, with no vehicle to drive their concerns in case of disputes. Recognizing the need to safeguard the interests of property buyers and prevent exploitation by developers, the government introduced the Real Estate Regulatory Authority (RERA) Act in 2016. RERA was brought in to sketch clear guidelines for real estate developers in India and protection for homebuyers, ensuring fairness in real estate transactions. It is an act to create a vehicle that regulates and addresses issues like project delays, pricing of the property, and quality of construction; efficiently and transparently.

This act extends to the buyers, various rights and imposes specific rules and regulations on all builders and developers. Each state is mandated to create a Real Estate Authority, to make real estate safe for buyers.

Here are some ways in which RERA impacts buyers. 

1. Timely Possession of Apartments 

Under the Real Estate Regulatory Authority (RERA), the issue of delayed possession of apartments by developers is addressed comprehensively. Developers failing to meet the agreed-upon delivery dates are now liable to pay an interest rate of 2% above the State Bank of India's lending rate to homebuyers. In addition to that, the developers are also liable for imprisonment for up to three years in case of defaulting on delivery date timelines. RERA not only ensures timely possession of properties but also holds developers accountable for any deviations from agreed-upon schedules, thus protecting the interests of homebuyers.

2. Transparency in Area Measurement and Buyer Consent Mandated

Under the Real Estate Regulatory Authority (RERA), significant reforms have been introduced to address the faulty practices by builders in defining the 'carpet area,' ensuring that buyers are aware of the actual usable space they are purchasing. Previously, there was ambiguity in the actual area of the property, where buyers paid for built-up or super built-up areas, whereas only a fraction of it was usable. Now, RERA has mandated a clear definition of the carpet area, providing clarity and fairness to homebuyers.

Moreover, RERA also mandates that developers seek the consent of the buyers before making any changes to the project's design or structure of the property. This ensures that buyers have a say in important decisions that may affect their investment and living experience. prioritizing transparency and buyer empowerment.

3. Quality Assurance

The quality of a structure is one of the most significant factors when buying a property. In this regard,  RERA has addressed the longstanding concern of buyers regarding the quality of construction. Under RERA regulations, developers are legally obligated to rectify any structural defects that occur in the property for up to five years from the date of possession.

This provision serves as a safeguard for homebuyers, ensuring that they receive properties of superior quality. In case of structural defects, developers are required to promptly repair them within 30 days without imposing any additional charges on the buyers. This has not only protected the investment of homebuyers but also instilled confidence in the integrity and reliability of developers.

By holding developers accountable for the structural integrity of their projects, RERA reinforces its commitment to enhancing buyer confidence and ensuring that properties meet the highest standards of construction quality.

4. Designated Use of Buyer Investment

Under RERA regulations, developers are mandated to adhere to strict guidelines regarding the utilization of funds received from buyers. One of the key provisions requires developers to deposit 70% of the funds received from buyers into an escrow account. This measure serves to safeguard the interests of buyers by ensuring that their investments are utilized solely for the intended project.

Furthermore, the withdrawal of funds from the escrow account is subject to approval from designated professionals such as engineers and chartered accountants hired by the developer. These professionals assess the progress of the construction and decide at which stage the funds can be withdrawn for further development.

By implementing this mechanism, RERA aims to prevent the diversion of funds for other projects and promote transparency and accountability in real estate transactions.

5. Quick Dispute Resolution Mechanism

The Real Estate Regulatory Authority (RERA) has introduced a robust dispute resolution mechanism aimed at addressing grievances between builders and buyers in the real estate sector. One of the key features of RERA is the establishment of regulatory bodies and appellate tribunals in each state to oversee and resolve builder-buyer disputes within 120 days from the date of filing the complaint in an impartial, transparent, and accessible way being fair to all parties involved.

Under RERA regulations, any person aggrieved by the actions or decisions of a builder or developer can seek redressal through the regulatory body or appellate tribunal established under the respective state's RERA authority. These bodies are empowered to adjudicate on various matters, including project delays, quality issues, unfair practices, and contractual disputes.

6. Clearance & Approval Transparency 

One of the significant challenges faced by homebuyers in the past was the lack of transparency regarding project clearances and approvals, leading to various issues and uncertainties. However, with the implementation of the Real Estate Regulatory Authority (RERA), transparency and accountability have become paramount in the real estate sector.

Under RERA regulations, builders and agents are required to register themselves with the regulatory authority before promoting or selling any real estate project. This registration process entails disclosing comprehensive details about the project, including land titles, approvals, timelines, and financials. Builders must provide all necessary information to the regulator, ensuring transparency and clarity for potential buyers.

Furthermore, RERA mandates that builders can only commence selling projects once they have obtained all the necessary clearances and approvals from relevant authorities.

7. Credibility in Real Estate Advertising

Before RERA was introduced, homebuyers often fell victim to misleading advertisements and false promises made by developers, leading to dissatisfaction and legal disputes. RERA has changed the real estate advertising landscape by mandating that all promotions or advertisements related to real estate projects must be without any false commitments or misleading information. 

Developers are required to provide accurate details about the project, including specifications, amenities, timelines, and pricing, ensuring that buyers make informed decisions based on reliable information. Every advertisement related to real estate projects must display the RERA registration number so that buyers can easily verify the authenticity of the project and the developer's compliance with regulatory norms.

8. Comprehensive Information 

After the establishment of the Regulatory Authority (RA), all builders and agents must complete their registration process. This includes registering their projects and submitting financial statements, copies of legal title deeds, and other relevant documents. Upon completion of the registration process, a registration number is provided to them which determines the credibility of the developer and the project. Hence, it is imperative to ensure that the project you are interested in is registered with RERA. 

Check out Rishita Developers’ projects that are RERA compliant and ensure that your home buying experience is seamless.