A common man does not just buy a house, he buys a dream. The real estate industry has been plagued with huge project irregularities, delays, gross contravention of laws - with many buyers even losing their investment. All of this has created huge trust deficit between the buyers and sellers.
The Real Estate Regulatory Act (RERA) came into effect from May 2017 in Maharashtra, with a promise to address aam buyer concerns. One key feature of the Act is that developers will now have to deposit 70% of the money in a separate account to ensure that the funds are utilized for the project alone and will not cause any project delays. The timely delivery, if facilitated, will be a big boon for the home buyers. The buyer will pay only for the carpet area, as against the current policy of super built area payments. Further, developers will have to obtain all clearances before selling projects, that can come as a huge relief to buyers who have to otherwise suffer many inconveniences. No changes can be made to the initial plan shown to the buyers, without their written consent.
Even registrations are now mandatory for commercial & residential projects requiring over 500 sq meters land or includes eight apartments & are under construction. Failure to register will invite penalty upto 10% of project cost. The Act also provides for registrations of Realtors, and has provisions to bring about transparency in their workings.
One of the objectives of ReRa seems to be to regulate the highly whimsical real estate sector. The onus of implementation of the Act is on the State Government. States have demanded some relaxations to the rules, but the Government is in no mood to oblige or make concessions currently. States will have to set up regulatory bodies, which buyers can separately approach for grievance redressal.
Business consultants, advisories will have to take note of these new regulations while embarking or advising on a project.
ReRa Act is definitely a landmark legislation that, if implemented in right earnest, can bring great transformation in the sector. However, the entire system, including the political system, needs to align with the spirit of legislation and avoid any tendencies to circumvent and dilute the intent. The political and licensing authorities, will have to ensure an enabling atmosphere for the real estate developers and realtors to implement the provisions of the Act. As also, developers should ensure that it gets back the lost credibility with aam buyer class.
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