RERA 2016 protects the interest of Homebuyers
The Real Estate (Regulation and Development) Act, 2016 (RERA) seeks to protect the interests of home buyers and also boost investments in the real estate sector. The Rajya Sabha passed the RERA bill on March 10, 2016, followed by the Lok Sabha on March 15, 2016 and it came into force from May 1, 2016.
Benefits of RERA 2016
For Industry
- Governance and transparency
- Project efficiency and robust project delivery
- Standardization and quality
- Enhance confidence of investors
- Attract higher investments and PE funding
- Regulated Environment
For Developer
- Common and best practices
- Increase efficiency
- Consolidation of sector
- Corporate branding
- Higher investment
- Increase in organised funding
For Buyer
- Significant buyers protection
- Quality products and timely delivery
- Balanced agreements and treatment
- Transparency – sale based on carpet area
- Safety of money and transparency on utilisation
Agents
- Consolidation of sector (due to mandatory state registration)
- Increased transparency
- Increased efficiency
- Minimum litigation by adopting best practices
RERA 2016 vs RERA 2013
The RERA 2013 act did not cover either “ongoing projects” or “commercial real estate”. Also, the minimum limit for registration of projects was so high that it excluded many projects from the coverage under law. These exclusions made the 2013 bill meaningless and harmful to the interests of home buyers.
The RERA 2016 act has fixed all the loopholes in the RERA act 2013. After a holistic review along with multiple stakeholder consultations both “ongoing projects” and “commercial projects” were included in the act. The minimum limit for registration of projects was reduced to cover more projects. It reduced evasion under law.
How RERA 2016 contributed to the empowerment of consumers?
This Act has been formulated to provide an enhanced edge to the consumer who till date has been hassled by issues like delayed deliveries, ballooned budgets and extended EMIs. RERA act addressed the existing power gap in the real estate sector between buyers and promoters. It further empowered the consumers in the following ways-
- The real estate sector which was largely unregulated is now being regulated under RERA.
- RERA along with demonetization and GST has reduced the use of black money in the real estate sector.
- It has the mandatory rules of getting approval of competent authority for project plans.
- To prevent fund diversion, Promoters are required to maintain funds of a specific project in separate bank accounts.
- Disclosure of unit sizes based on “carpet area” has been made mandatory. It has reduced the scope for unfair trade practices.
- It promotes equity by making it mandatory for payment of “equal rate of interest” by the promoter or the buyer in case of default.
