Understanding Real Estate Regulation Act in its truest sense

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Understanding Real Estate Regulation Act in its truest sense

Submitted By: Tarun Ghai, National Law University, Orissa

Real estate is considered to be a blooming industry for any developing country. In the country like India which has the second largest population in the world the need for housing for all is the most important area which the government must work upon. With large number of unorganised players in this industry there was a need of a regulation with would drive this industry in a particular lawful way. Many unregistered agents and brokers are working in the market and making a monopoly of their own, there was a need to bring a law which would regulate this sector. For curbing the menace of this problem, the government in 2013 introduced the RERA Bill which was passed by the parliament last year. The RERA bill is a central government law but it would be left to the discretion of the state government whether they want to implement this law or not

Advantages of  RERA Act

-To solve the increasing number of disputes between the buyer and builder the state will setup regulatory bodies as appellant tribunals which would be required to solve the disputes within 120 days

-Out of the total advance money which the builder takes from buyer, the builder now needs to make sure that he deposits exactly 70% of this amount in a separate account

-The liability of the builder has been increased from 2 years to 5 years where the developer will now be liable for any repairs which were to be made due to structural defects

-If the developer is planning to launch a project which is more than 8 apartments or exceeding 500 sq.mt. then it needs to register itself with the regulatory body.

-The Regulatory Authorities will make sure that progress of each project is made available on their website, also in case of disputes the details of the litigation be made available for more transparency. Other than this information related to registered agents and developers, details of apartments, plot and garages, financial details of promoters, approval of different projects will be made available.

-RERA seeks to regulate the promoter and make sure that the projects are completed on time.

This bill however provides for benefits to the builder as well,in case the allottee fails to pay the due amount and there is dispute between the buyer and developers than the developer can approach the appellant tribunal          

Impact of RERA

After the passing of RERA Act several impacts were measured-

According to the report published there has been a decline of 8%in launching projects after the said act.Also it is observed that the unorganized sector ie the small agents and brokers who get small commission out of the total buying and selling are the worst hit by this act. For the registration process, the developers now need to submit their PAN cards and also annual profit and loss report which only add to the burden of their work. The Act however is a boon for small middle incomefamilies as there is a provision that in case the developers does not complete the work in time then fines and penalties will be put on him also.The buyer can also get interest from the developer, but this rule varies from state to state.

According to economists the prices of property won’t rise after the implementation of the said act as there would be large number of projects which might get stuck and will create a situation of ample unsold property. Different banks have also said that they won’t be giving any kind of loans to these builders who are not registered under the act.  

Role of RERA with regards to consent is very important, RERA has made sure that there is existence of the provision whereby any changes made in the project should be immediately registered, now there may be a case where the developer tries to get away with the laws, for that Section 14 of the Act says that any alteration needs to be registered only with the prior consent of the consumer, also where there are large projects,  the developers needs consent of 2/3rd of the total number of buyers of the project because they are the actual stakeholders of the project. In case the RERA body finds that the developers are involving themselves in any kind of unfair and unlawful activities then their registration can get cancelled, the power for the same has been given under section 7 of the act.

In cases where few bullying developers try to obtain the consent through unlawful means than in that case the buyers have the option of approach the regulatory authority under Section 31 where RERA body which is the presiding body investigates and tries the matter by the power given to them under Section 35.

To conclude, for years we have seen that builders and contractors have dictated the terms according to their own wishes but with the passing of RERA,2016 an attempt has been made to bring in equality between the buyers and the developers, also at the same time making sure that consumers are not dictated by the terms of developers.

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