Changes in the Real Estate Sector After the Real Estate (Regulation and Development) Act, 2016

• Admin
• 28-10-2023

The Real Estate (Regulation and Development) Act, 2016 (RERA) is a landmark legislation that has brought about significant changes in the real estate sector in India. The Act was enacted to protect the interests of homebuyers and to promote transparency and accountability in the sector.

Key changes introduced by RERA

·        Establishment of Real Estate Regulatory Authorities (RERAs):

RERA has established Real Estate Regulatory Authorities (RERAs) in each state and union territory. These authorities are responsible for registering real estate projects and developers, and for adjudicating disputes between homebuyers and developers.

·        Mandatory registration of real estate projects and developers:

All real estate projects and developers must be registered with the RERA in the state or union territory where the project is located. This ensures that only bonafide developers are able to launch projects and that homebuyers have access to certain information about the project before they invest their money.

·        Disbursement of payments to developers in stages:

Under RERA, homebuyers are required to make payments to developers in stages, linked to the progress of construction. This helps to protect homebuyers from the risk of developers abandoning projects midway.

·        Standard disclosure format for real estate projects:

RERA has prescribed a standard disclosure format for real estate projects. This disclosure format requires developers to disclose all relevant information about the project, such as the land title, approvals, construction schedule, and amenities. This helps homebuyers to make informed decisions about their investment.

·        Stricter penalties for developers:

RERA has imposed stricter penalties on developers for violations of the Act. For example, developers who fail to register their projects or who make false statements in the disclosure format can be penalized with imprisonment and/or fines.

·        Impact of RERA on the real estate sector:

RERA has had a significant impact on the real estate sector in India. The Act has made the sector more transparent and accountable, and has helped to protect the interests of homebuyers.

Benefits of RERA for homebuyers

·        Protection from fraud and malpractices:

RERA has helped to protect homebuyers from fraud and malpractices by developers. Under RERA, developers are required to disclose all relevant information about their projects and to comply with certain standards of construction. This helps homebuyers to make informed decisions about their investment and to avoid being cheated by fraudulent developers.

·        Speedy redressal of grievances:

RERA has established a mechanism for the speedy redressal of grievances of homebuyers. If a homebuyer has a grievance against a developer, they can file a complaint with the RERA in their state or union territory. The RERA will then investigate the complaint and adjudicate the dispute. This helps homebuyers to get justice quickly and efficiently.

·        Increased confidence in the real estate sector:

RERA has helped to increase confidence in the real estate sector. Homebuyers now feel more secure about investing in real estate, knowing that they are protected by the Act. This has led to an increase in demand for real estate, which has benefited the sector as a whole.

Challenges in the implementation of RERA

Despite its many benefits, there are some challenges in the implementation of RERA. One challenge is the lack of awareness among homebuyers about their rights under the Act. Another challenge is the shortage of staff and resources at the RERAs. This can lead to delays in the processing of complaints and the adjudication of disputes.

Conclusion

RERA is a landmark legislation that has brought about significant changes in the real estate sector in India. The Act has made the sector more transparent and accountable, and has helped to protect the interests of homebuyers. However, there are some challenges in the implementation of RERA, which need to be addressed.

Additional information

In addition to the key changes and benefits mentioned above, RERA has also introduced a number of other provisions that are beneficial for homebuyers. For example, the Act requires developers to deposit 70% of the payments received from homebuyers in a separate escrow account. This helps to ensure that the funds are used only for the construction of the project.

RERA has also made it mandatory for developers to provide homebuyers with a warranty certificate for the property. This warranty certificate covers any defects in the property for a period of five years from the date of possession.

Overall, RERA is a positive development for the real estate sector in India. The Act has helped to protect the interests of homebuyers and to make the sector more transparent and accountable.