The Real Estate Regulatory and Development Act passed in the year of 2016 by the government of India is proposed to put an end to various issues in the real estate sector with a promise of protecting the interests of the home buyers. RERA includes many policies that will increase the transparency of transactions in the world of real estate. Lack of transparency is one of the major reasons to many fraudulent activities and RERA has created a hope for better and a more systematic way of dealing with the real estate transactions. Post RERA, there have been significant changes in the way things are carried out in the real estate industry. The impact of RERA is seen not only on the home buyers but also on the builders. Home buyers can now confidently invest in real estate without having to bother too much about scams and frauds. This blog is an overview of RERA's impact on builders. Read on!
RERA has made it mandatory for every property builder to post information of projects on their websites. Builders are also required to clearly specify all the relevant data and specifications about the property on their website. Information concerning the title of the deed, co-owners, details about common area space like the parking lot, gardens, gym area, club area etc must be clearly specified as well.
Gone are those days where builders made minor or major alterations to the property layout without seeking the approval of the respective allottees. RERA has now made it mandatory for builders to get a formal approval of 2/3rd majority of the property allottees before they proceed with any minor or major alterations.
A lot of home buyers had various issues with the fraud or scam made by the builders with regards to the carpet area. The total area of the house specified by the builder or agents were quoted after including the area occupied by the balcony, store room, veranda and so on. This resulted in huge disappointment in the buyers as they ended up having homes smaller than what they had expected. RERA has fixed this issue and regulations have been made to ensure that builders specify the exact carpet area of the home.
Pre RERA, builders had no legal restrictions on the application of the amount collected from the property allottees. This often led to delay in the project deliveries as builders often allocated the money collected from property allottees for various other projects. RERA has now made it mandatory to deposit 70% of the total amount collected from the property allottees once it is collected. This ensures the right usage of funds and minimises the chances of delay in project deliveries.
The amount withdrawn from the reserve account must now be in proportion to the project completion as per the law in RERA. Such withdrawals must also be audited by professional statutory auditors, accountants or chartered accountants. Thus, the builders cannot withdraw money for purposes other than the completion of the project.
Delays in the project deliveries had become a common deal in the world of real estate. This had diminished the hopes of many buyers. But with the RERA, there's going to be a huge downfall in the trend of delay in project deliveries. The builders are charged extra interest and penalties for the period of delay.
Hope you found this article on ‘RERA Impact On Builders’ helpful. Feel free to share your thoughts in the comments section below.
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