India being a populous country, a checks and balance mechanism sooner or later was inevitable. The Real Estate Regulation and Development Act, 2016 is an answer to most of the woes that had seeped within the property market both for developers and consumers.
While unstructured sellers had tarnished the repute of long and steady-standing builders, unsure purchasers in the market had led to a huge demand-supply crisis. More havoc was played by disproportionate, unfair clauses especially when it came to money matters such as project delays, penalties to be paid by either side as also tall promises that often did not materialise. Added to this were issues like formation of a new government, bifurcation of states and a lot of changes related to these on ground which made prospective buyers wait and watch.
The Real Estate Regulatory Act seeks to reform the industry, checking those issues that have resulted into an overall mistrust and negative sentiments when it comes to an investment in real estate. The pivotal provisions of the Act include financial discipline, accountability, compliance with the customer at the centre.
These provisions make RERA as one of the most awaited introduction within the sector:
No scope for false promises
No promoter is vested with any power to advertise without registering the real estate project. This will help property buyers regain lost confidence in the sector as now projects would need to pass the vigilant eye of the regulatory authority. This will also help genuine developers to prove their mettle.
Developer to be held for structural defects even after sale
The responsibility of the promoter with respect to structural defect or any other defect will continue even after the conveyance deed has been executed. This has been understood for a period of five years after possession and this will pull in prospective buyers who has been forever been on the lookout for somebody who will take the onus of his own construction.
Promoter cannot ask for more than 10 per cent before formalities
The Act makes it mandatory that heavy transactions can happen only if these are documented. Therefore, if consumers do not feel comfortable paying up huge volumes of money, they needn’t and the law absolutely supports this.
Authority sanctioned alterations
As per the Act, no deviations in the advertised and registered project are to be entertained. At a time when consumer forums had been flooded with complaints about developers not being able to or deliberately altering the original map, this clause is assuring for many.
Promoter cannot sell his rights to a third party without consent
There have been many instances in the past where aggrieved homebuyers have complained about sellers transferring their majority rights to a third party without consent or intimation to allottees. At such times, it becomes difficult for home buyers to know their footing in the newly taken over project.
Some checks for buyers have also been put in place which would go a long way:
• Occupancy Certificate is a responsibility – Not just the developer, it is binding upon the homebuyer to take physical possession of the plot, apartment, building within two months of the occupancy certificate being issued to the developer. Opting for a fit-out building is no longer an option.
• Association of homebuyers is compulsory – Every property purchaser must get together to solve problems related to the housing society. This association also takes care of common resources and considers logistics as well mandatory registrations which are binding on every housing complex.
• Allottees in projects beyond planning area also have a say – In the interest of the allottees, the authority can order the developer of a project to register with the authority and thereby become bound by the rules and regulations prescribed.
The provisions come out to be wholesome. However, there are aspects that need tweaks and attention too. For example, there is ambiguity with regards to cost of the project and cost of construction. While some states have detailed these, others have left it open to interpretation which may mean dilutions or non-adherence. This must be considered.