The government enforced the Real Estate (Regulation and Development) Act, 2016 (RERA Act) for protecting the interests of the homebuyers. This Act also provided for the ‘Real Estate Regulatory Authority’ establishment to regulate the real estate sector and ensure the sale of an apartment, plot, or building transparently and efficiently.
Before enacting the Real Estate (Regulation and Development) Act, there was no proper mechanism for the protection of buyers, and they complained that the real estate transactions favored the developers. There were delays in providing possession of the apartments or plots and obtaining the required permissions by the developers. There was a lack of accountability, clarity, and transparency in the real estate sector.
Thus, the RERA Act came into force to remove the difficulties faced by the homebuyers and establish an effective mechanism for fair transactions between the sellers and the buyers of the properties. The respective State Governments need to establish the Real Estate Regulatory Authority for exercising the powers and performing the functions under the RERA Act.
The promoters/developers need to register their real estate project with the Real Estate Regulatory Authority before advertising, promoting, inviting persons to purchase or sell their real estate projects or any part of it. This registration ensures that the real estate projects are genuine and protects the buyers’ interests.
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The RERA Act provides the calculation of the carpet area. The developers must follow and adhere to the definition of carpet area while calculating the same. Thus, the calculation of the carpet area is uniform across India after the introduction of the RERA Act, and the promoters cannot inflate the carpet area to increase prices. The RERA Act also provides that a developer cannot take more than 10% of the project’s cost from a buyer as advance.
When there is a delay in delivering the property’s possession to the buyer, the developer must pay the same interest rate as the buyer would pay for any delay in paying the amount. Before the RERA Act, the promoter/developer paid much less interest to the buyer for the delay in handing over the possession when compared to the interest paid by the buyer for the payment delay.
The RERA Act also provides that the developers should rectify the damages in the structural defects or defects in quality within five years from handing over possession to the buyers without any cost. Where there is a mismatch in the promised property and its delivery, the buyer can recover the complete refund of the advance paid.
The buyers have the right to claim compensation from the developers if they discover a defect in the title at the time of possession. In addition, the buyers can file a complaint with the Real Estate Regulatory Authority regarding any real estate project. The buyers can also file an appeal from the Real Estate Regulatory Authority order to the appellate tribunal.
Although the RERA Act provides several benefits to the buyers, there is no strict enforcement of these provisions. In addition, there is a lack of staff in the Real Estate Regulatory Authority, making it difficult to deal with cases and inspect projects.
Though the COVID-19 pandemic has hit the real estate industry, there is still a demand for housing and infrastructure. However, there is no proper adoption of the RERA Act in its true spirit and form. A few shortcomings need to be addressed for RERA to be implemented wholly and effectively to benefit the homebuyers as envisaged under the RERA Act.