Why go for a real estate project registered with RERA?
The Real Estate (Regulation and Development) Act of 2016, intends to protect the interest of home buyers. In this blog, we explore how it will affect the various stakeholders.
While all its provisions came into effect, from May 1, 2017, Developers had been given until the end of July 2017 to register their projects under MahaRERA. Post registration, citizens will be able to view, on MahaRERA website, all disclosures pertaining to registered projects. This shall enable data driven informed decision making.
How will RERA impact home buyers?
- Registration with RERA will be mandatory before commencing the sales and marketing of any project. Increased assertion on the timely completion of projects and delivery to the consumer.
- An increase in the quality of construction due to a defect liability period of five years.
- Home buyers will have more insight into the projects that they are considering to associate with.
- The most positive aspect of this Act is that it provides a unified legal regime for the purchase of flats. It seeks to standardise the practice across the country.
Impact of RERA on real estate industry
- Initial backlog
- Increased project cost
- Tight liquidity
- Rise in cost of capital
- Increase in project launch time
Which projects come under RERA?
- Commercial and residential projects including plotted development
- Projects measuring more than 500 sq mts or 8 units
- Projects without Building Completion Certificate or Occupation Certificate (OC), before commencement of the Act
- The projects which are only for the purpose of renovation / repair / redevelopment which do not involve re-allotment and marketing, advertising, selling or new allotment of any apartments, plot or building in the real estate project, will not come under RERA
How can a builder be RERA COMPLIANT?
- Project registration
- Withdrawal – POC method
- Website updation/ disclosures
- Project accounts – audit
- 70% of the funds collected from allottees needs to be deposited in the project account. Withdrawals cover construction and land cost
- Withdrawals to be in proportion to the percentage completion method
- Withdrawal to be certified by an engineer, architect, and CA
- Provision for RERA to freeze project bank accounts upon non-compliance
- Interest on delay will be same for customer and promoter
Market situation after one year of RERA
- There have been fewer project launches and the focus has been on execution of on-going projects
- Developers have to adhere to compliances, or face strict penalties
- All stakeholders can have single point access to all important information about a registered project on MahaRERA website
Thus, we can say that RERA is a step towards reforming the real estate sector in India, encouraging greater transparency, citizen centricity, accountability and financial discipline.
All RERA registered projects in Maharashtra, Dadra Nagar Haveli and Daman and Diu are available on the MahaRERA website: https://maharera.mahaonline.gov.in