With the implementation of Real Estate (Regulation & Development) Act, 2016 (RERA), homebuyers may finally be able to bid goodbye to inordinate project delays and shoddy quality of construction.
RERA, which will be implemented from Monday is expected to bring the much-needed relief to homebuyers as builders will be accountable for the timely delivery of the projects.
Housing demand is expected to revive with the implementation of the real estate law from May 1 as it is expected to protect homebuyers from unscrupulous players.
"No more will unscrupulous smaller builders or even larger organised developers be able to take buyers for a ride," said JLL Residential (JLLR) Chairman Anuj Puri.
This law literally holds the key to the future growth of the Indian real estate as it has the potential bring transparency to clean up the sector. He said the time has finally come for homebuyers in India to breathe free and invest confidently, he added.
Implementation of the new law is expected to boost the demand in the real estate sector where unsold inventories have been piling up since demonetisation of the high value currency notes.
Here are five ways in which RERA could help homebuyers
Builders can't delay projects
Scores of homebuyers in real estate hubs such as Noida have not been able to get the possession of their apartments even after paying the full amount to builders. Under the new law, developers need to pay an interest rate of 2 percentage points above State Bank of India's lending rate to the homebuyers. RERA also prescribes imprisonment of up to three years for errant developers.
Builders can't charge for area outside the walls
The buyer will pay only for the carpet area (area within walls). The builder can't charge for the super built-up area, as is the practice at present, where you get 900-1,000 sq. ft. carpet area if you book a 1,300 sq. ft. house (the rest is balconies and common spaces). The new law is expected to stop this practice.
Builders responsible for any defect in the house
The builder will have to provide for any structural defect in the building for five years. However, the law doesn't define structural defect clearly, which may lead to disputes between builders and home buyers, says Gaurav of HKJ & Associates.
RERA also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter.
Builders can't use your money to make someone else's house
The developer will have to transfer 70 per cent money received from home buyers to an escrow account. "This money will be withdrawn as per the stages of construction, approved by engineers and chartered accountants of builders. This will prevent developers from using the money raised for one project for any other project.
Quick redressal of grievances
Under RERA, regulatory bodies and appellate tribunals have to be set up in each state to solve builder-buyer disputes within 120 days. Besides, promoters will not be able to change a project's design without buyers' consent. Promoters must have the consent of two-thirds of the buyers in a project before making any change in the number of units or other structural changes.