Real Estate Regulatory Authority (RERA), a celebratory win for the home-buyers. Let's understand what is it all about and what is the scenario after the implementation of the Real Estate (Regulation and Development) Act, 2016?
What is the Real Estate (Regulation and Development) Act, 2016?
It is an Act which is providing protection to the home-buyers so that they can invest safely in the real estate industry. According to this Act, builders need to register their ongoing and future projects related to real estate sector and need to deposit the 70% amount of home-buyers in separate account namely escrow account .
· The separate account maintained under RERA provides protection to the money of home-buyers.
· This Act has brought fair and transparent system for the performance of work in the real estate sector.
Implementation of RERA
The implementation of RERA was a big task but finally on 15th March 2016 the Act was passed and enacted by the Parliament of India. Now let's see what the scenario is after and before the implementation of the Real Estate (Regulation and Development) Act, 2016.
Before implementation of RERA
1. Loss of money
No safety standard for the money of home-buyers. Fraud cases like Unitech, Amrapali groups, etc. has been seen where the investors have suffered huge amount of loss because these groups have used the money of home-buyers for their personal use.
2. Promises vs. reality
As promised by builders before making of new homes, no such promises have been kept as there is lot of difference in promises and in reality of house design which results into loss of hard earned money of the investors. It means that true picture of house is not presented on an earlier stage.
3. Delay in delivery of flats
Possession of house is not given on time. The buyers have put all their hard earned money into purchasing their flats but delay in possession by the builder makes the life of buyers sad and gloomy. In many cases, it was also found that possession was given before the issuance of occupancy certificate.
4. Market of developers
Before implementation of RERA, there was no one who could see the unfair practices of developers. The Developers used to invest in more than one project at the same time which resulted in non completion of the other project and thus, resulting to a huge loss for buyers.
After implementation of RERA
1. Umbrella to home-buyers
The Real Estate (Regulation and Development) Act, 2016 is like an umbrella to the home-buyers as it provides safety and security of the money which is invested by the people to buy their homes or shops. Now the money of such buyers is secured as it is submitted in a separate account maintained under the Real Estate (Regulation and Development) Act, 2016.
2. True picture of project
The Real Estate (Regulation and Development) Act, 2016 mentions that it is the responsibility of the developers to provide the same thing which is presented to the home-buyers earlier. Variations in the presented house project results into heavy penalty and punishment for developers.
3. Possession of house
Now it is mandatory for the developers to provide the possession to home buyers in the said time with all the relevant certificates and documents. Resulting into the failure of this will create problems for builders as they will have to pay compensation for every month delay in handing over of possession to the buyers.
4. Market of buyers as well as builders
After the implementation of the Real Estate (Regulation and Development) Act, 2016, both buyers and builders will be considered. Now, it is the obligation upon builders first to complete its project rather than involving in 4-5 projects at the same time. Without sufficient funds developers cannot indulge in many projects.
5. Brand value of developers
Earlier there were many builders; some have a very good brand value and are involved in making thousands of flats and there were some small builders who do not have any brand value due to which people did not have trust. Scenario has changed as every unit has to be registered under the Real Estate (Regulation and Development) Act, 2016 so now people can easily trust in the real estate sector. This Act also provides brand value to small as well as big developers.
Highlights after 2 years of the Real Estate (Regulation and Development) Act, 2016
· Home-buyers and investors started gaining trust in the real estate sector.
· Transparency in the real estate sector can be seen.
· Implementation of the Real Estate (Regulation and Development) Act, 2016 remains an issue in some of states as full time regulators are not appointed yet.
· Attracted foreign investments.
· Problems of builders in taking multiple approvals within the short period of time.
· Few sections of this Act should be revised in future considering customer's as well as builder's or developer's convenience.
Scope of the Real Estate (Regulation and Development) Act, 2016
1. Efficient financial transaction
With the important rules and regulations in time, financial transactions will become more efficient in every state. It is necessary to regulate fair and transparent practice with regards to money.
2. Reduction in black money
Developers will be forced to reveal their construction cost accurately. This will help in reducing circulation of black money. This will improve the real estate sector and prices of the property will be stable.
3. Faith of buyers ensured
Buyers will trust in the real estate sector as their investment will be safe and secure. Home-buyers will not be facing problems with illegal or unplanned construction.
4. Support to government policy
The Real Estate (Regulation and Development) Act, 2016 is also a step in support of the Government's "housing for all by 2022" scheme because of this bill major boost can be seen towards this policy.
5. RERA and GST Combination
RERA coupled with GST will bring down the reduction in prices of raw materials.