The RERA Act safeguards the buyers’ interests while bringing more transparency to the real estate sector. This article will give you an insight into the impact of RERA on builders in real estate.
RERA or the Real Estate Regulation and Development Act was passed in 2019 by the Government of India not only to regulate the real estate industry but also to protect the buyer’s interests, encouraging builders to complete tasks timely and be more professional.
Along with this, there are many impacts of RERA on builders that we shall see further on. But first of all, let’s understand what RERA is and its importance.
What is RERA?
The Government of India created RERA, intending to regulate the real estate industry and remit the issues faced by buyers in a better way. To eradicate the discrepancies and the opaqueness in real estate that prevailed, RERA was introduced.
Cases such as rising overhead costs, delayed possession, and project cancellations needed to be heard. People suffered both financially as well mentally.
Many times, victims had to vacate their homes even though they lived there for a long time only because the developer did not get approval from the government for the project. Home buyers have the right to file a complaint, but we all know how fast our judicial system is. Even a simple case may take quite a few years to get resolved.
Below are some RERA key points given:
- The foremost key point is to ensure the allottees’ interests are not harmed in any way.
- RERA maintains transparency in the real estate industry.
- RERA brings out all India standardization in the real estate sector.
- RERA works to improve the flow of verified information between home buyers and property sellers.
- It makes sure that the builders, as well as the investors, take responsibility.
- RERA tries to improve the sector’s resiliency to improve investor confidence.
- RERA established a real estate appellate tribunal.
- The mandatory real estate regulation was that all projects if their plot size was a minimum of 500 sq. mt or consisted of eight apartments, needed RERA registration.
Reasons that led to the establishment of RERA
One of the largest sectors in India is real estate. It has witnessed a rapid increase in growth in the past decade. Real estate handles hundreds of new real estate projects every year.
However, with power comes responsibility. Similarly, with power comes fraud. Many scams and frauds in real estate are bred only because of loose laws. The lack of standard rules, laws and regulatory bodies led to corruption in the industry on various levels. The lower and middle classes were the most affected since the builders only looked for their gain.
The Government of India introduced the RERA Acts in 2016 to end the miseries experienced by innocents and bring transparency to the real estate industry.
Impact of RERA on builders and developers
RERA has effects on real estate and the way property is handled.
The below-mentioned points describe the impact of RERA acts on builders and developers:
- The number of projects launched will not be the same as before since the builders and promoters need to understand the impacts of the Real Estate Regulation and Development Act.
- Dishonest and fraudulent builders will not be able to sustain themselves in the real estate market due to the enactment of the Real Estate Regulation and Development Act.
- Financial discipline will be further encouraged, thanks to the 32 sections added to the RERA act.
- The developers and builders will face less competition in the market since the scamming promoters will be gone.
Impact of RERA on home buyers
There are many impacts on the home buyers after RERA was implemented. Let’s see some salient points:
- Home buyers will have access to all the details regarding the project.
- The carpet area will be mentioned.
- There will be assured transparency in financial matters.
- Buyers will have guaranteed clarity on the completion dates of their projects.
- Timely updates on the project will be provided to the buyer.
- The builder, developer, or promoter cannot make any changes without the buyer’s involvement.
- In case of complaints, RERA will assist the victim quickly.
Impact of RERA on real estate agents
So what does RERA mean in real estate? Real estate fraud and fake brokers have cheated innocent people for many years. The establishment of RERA ensured that innocents would not suffer from this anymore.
It became a must for real estate agents to register themself on the RERA website. RERA cross-checks all the details provided by the agents. This lets buyers see for themself and find out the fake estate agents from the real ones.
Ways to Ensure that the Property is in Compliance with RERA
You will find a RERA compliance checklist below:
- RERA-approved means to be registered to RERA. If the property is more than 500 square meters, it must be registered with the RERA.
- All the documents of the promoter or the builder should be uploaded on the online portal of the RERA.
- The registered projects need to update RERA their quarterly compliance report. Failure in updation will result in a heavy penalty.
- The developers should comply with the rules and regulations set up by RERA.
- Builders have the pressure and responsibility to complete their projects on time and give possession within three months.
- The developer is required to review the quality of the building. If defects are found, the builder needs to rectify them within the next 30 days without extra cost.
Benefits of RERA
How will RERA benefit buyers? You will find the answer to this below, along with some benefits enjoyed by the builders as well:
- RERA-registered developers provide the buyers with standard and modal sales documents.
- Any home buyers’ grievances are quickly solved thanks to RERA’s guidelines.
- Builders cannot make any changes without the knowledge of the allottee.
- Buyers have the power to hold the builders accountable at any stage of the construction and promotion process.
- Builders will be held responsible if the project is not finished within the deadline.
- Buyers need not pay for the super built-up area.
Drawbacks of RERA
We looked at many benefits of RERA. Now, let’s take a look at some of its disadvantages.
- Developers do not have the right to use the fund for the project anywhere else other than the project. This means previous funds cannot be used to build new projects.
- Regulations need permissions and approvals. This sometimes slows down the finishing of the projects.
- The strict regulations are cutting down on the interests of builders. Hence, reducing their profits considerably.
- Employment opportunities are lost since RERA developers are discouraged even though the real estate sector has good employability potential.
Thus, RERA registration holds all the necessary details of the builder, making it very important and useful. It aims to provide transparency and protect the interest of buyers.
Frequently Asked Questions
1. How will RERA affect builders?
Answer. Every builder needs to provide documents regarding themself on the RERA online portal. There is no scope for scams and frauds done by fake real estate agents and builders. Allottees must be conversed with regarding any changes in the projects.
2. How is the RERA Act helpful for the sustainable development of the real estate sector?
Answer. One of the most important developments brought in by RERA in the real estate industry is that the buyers will not be asked to pay for both the built-up area and the super built-up area. In simple language, this means the buyers will only need to pay for the carpet area.
3. What has been the impact of the RERA Act on the real estate sector and the economy?
Answer. The RERA Act aims to increase the transparency and hold scammers responsible. The strict rules of RERA led to protecting the buyers’ interest, which increased the economy overall.
4. Why is RERA registration important?
Answer. Since RERA aims to eradicate fraud and scams from the real estate sector, implementing strict rules and regulations was also needed. RERA registration is important since it holds all the necessary information regarding the builder. The buyers can see through which developer is fake and which is genuine.