RERA Full Form: Quick Guide for Newbies in Real Estate
Real Estate is exciting but also a little challenging for first-time buyers. Real Estate investment includes several legalities and processes. And RERA is one of the most essential and heard ones.
It is an Indian government law that impacts buyers and builders equally in the real estate sector. This game-changing act was introduced in 2016, yet many people are not entirely familiar with it, which is ok.
So, read this post till the end to know the complete form and benefits of the “RERA Act” and make informed decisions on your Real Estate journey.
What is the full form and meaning of RERA?
The acronym RERA stands for Real Estate (Regulation and Development) Act. It is an Indian law introduced in 2016 to enhance accountability and transparency in the Real Estate sector. Each state establishes a Real Estate Regulatory Authority (RERA) to monitor the Real Estate projects and adjudicate disputes between buyers and developers.
This Indian Act ensures that Real Estate projects are registered and meet legal requirements, building trust and security between investors and developers. It also provides a supportive space for people, including agents, buyers, builders, or promoters, to complain if anyone violates the provisions of this act.
On top of this, no civil court can have jurisdiction over matters that come under this Act. As a result, it creates a fast and efficient dispute resolution process and brings significant advantages for investors and developers during any disagreement.
Key points of RERA you must know
This act includes several rules and features. Here are 6 key points you must know:
1. Registration: All real estate projects over 500 sq meters in area need to be registered with RERA before being constructed, invested in, or marketed. This helps the government and buyers make safe decisions and avoid property disputes.
2. Project details: Under this act, the developers need to provide all essential project details to both the RERA and homebuyers. These details include the project area, plan layout, completion stages and financial and legal approval data.
3. Need buyers constant: A builder can make limited modifications in an individual unit after taking a written constant from them. For significant changes like plan layout, common area, and pricing, the builder needs to get written approval from at least two-thirds of apartment buyers.
4. Limit on Advance Payment: According to the rules of this act, no developer can charge more than 10% of the project’s cost in advance to the buyer.
5. Addition of escrow account: 70% of the money raised from homebuyers and investors must be deposited in a single account, referred to as an escrow account. Only 30% of the total advance and investment can be used in construction. The builders can withdraw funds from the escrow account after certification from chartered accountants, engineers, and architects.
6. Right pricing: Earlier builders calculated the price of a project in an undefined way, which cost the buyers more. Now, the Real Estate Regulatory Authority has introduced a standard formula in which the buyers need to pay only for the usable space within the property, excluding the common area, lobby, etc. (carpet area). This way, promoters can’t charge extra and manipulate the prices.
Overall Benefits of RERA for Buyers
Here are the key benefits of the Real Estate Regulatory Authority for homebuyers:
- Project transparency: Under this act, the developers need to provide comprehensive information about the project to both the public and the authorities. As a result, it helps buyers make wise decisions and stay updated about their investments with reliable information.
- Protection from fraud: The Real Estate (Regulation Authority) Act 2016 offers a dedicated mechanism to work on complaints and resolve disputes between buyers and developers. Additionally, projects registered or in the registration process cannot be launched until they get clearance from the authority. This rule helps to avoid any false claims and investments in unlawful projects.
- Disciplined work process: The Real Estate Regulatory Act requires developers to meet the timeline given by them. Delays in projects may result in penalties or compensation.
- Offer quality: Under the Real Estate Regulatory Act, developers are responsible for any structural defects found by buyers for up to five years. This timeline starts from the day of handing over the property, and the developer should repair the defects within 30 days.
- No false promotion: This authority ensures that the promotions and advertising provided by the developers and promoters include truthful information. Every registered project advertisement includes the RERA registration number, helping buyers build confidence and preventing false claims.
- Investment security: Under the Real Estate (Regulation and Development) Act, the developers need to have a separate bank account to keep the 70% of funds given by the homebuyers or investors. Further, this fund can’t be withdrawn without accurate documentation. This rule keeps your investment safe and in a reliable space. Moreover, the developers need to pay up to 5% interest on your investment if there’s any delay in the project.
Conclusion
The Real Estate (Regulation and Development) Act helps homebuyers classify safe and reliable real estate projects. RERA doesn’t allow the launch of any projects without clearance and ensures it offers transparency, protection, and accountability. RERA is a vital tool that gives customers confidence and helps them find trustworthy developers to invest in real estate.
FAQ
- What is the advantage of RERA-registered property?
Properties registered under this authority are secure and trustworthy to invest in.
- Should I buy RERA-approved projects?
It’s always wise to invest in Real Estate Regulatory Authority-approved projects.
- Who regulates RERA?
The state government regulates the Real Estate Regulatory Authority (RERA).
- What kind of properties should be registered in RERA?
Any Real Estate project on over 500 sq meters of land should be registered with the Real Estate Regulatory Authority.
