What is RERA?
After its passage in Parliament in March 2016, it received the presidential nod on March 25, 2016. The RERA came into force on May 1, 2017, a year after the government notified it.
1. It covers commercial and residential real estate properties, bought or sold with the construction covering at least 500 sq m or eight apartments.
2. Most important, it brings the entire real estate sector within a regulatory environment, defining the liabilities and liberties of a developer and providing an effective grievance redress mechanism to the buyer.
3. Under this, property developers will have to register their projects. Agents too will have to register themselves with the regulatory authority.
4. Developers will now have to provide project details, timelines and the layout plan (which under the current dispensation is rarely shared with the home-buyer). They will need to deposit 70% of the money raised from buyers in an escrow account.
5. There is provision for revoking registration and imposition of penalties. A big relief that RERA will bring is in respect of advertisements of projects. The promotional material will have to carry details of the projects registration as also the website of the regulator.
How did it come about?
It was necessary to bring the real estate sector under a regulatory framework as it had got a bad name due to the lapses of a few. Moreover, the house-buyer did not really have any effective forum to address his complaints, on either construction, quality, delays in delivery or frauds.
Why does it matter?
The Act has been described by the Centre as an attempt at cleaning up the real estate sector, ushering in transparency, accountability and fair-play among stakeholders.
This law will empower the consumer while boosting the credibility of developers. It is widely felt that the Act will shift housing demand at least in the immediate term towards the organised players, better-equipped as they are to fulfil various stipulations. Most such players have welcomed the Act, saying that it will bridge the trust deficit.
Essentially, the Act marks the first step in regulating a sector. Until now, consumers were protected by a State’s consumer protection measures, where getting justice was a long and arduous process. This law is more focussed.
But it must be noted that the RERA is a model Act and each State will need to notify its own Act separately as land is a concurrent subject. Many States are yet to do so. Till then in most States, promoters will be regulated by the Promoters Registration Act, which mandates registration by promoters. However, there is little scope of consumer protection here. Every State will have to notify the Act, set up a regulator and launch an awareness campaign to empower the consumer. Indications are that many States would want to frame their own Act and rules therein. This would be a time-consuming affair, putting the entire matter in a limbo.
Furthermore, in States where the Act has been put in place, developers need to begin logging in their project (old and existing) by July 1. The Appellate Tribunal for the developers to appeal against any regulatory order also needs to be in place by then.
(Adapted from The Hindu)