RERA in Home Loan

RERA in Home Loan

Each one of us dreams of becoming a home owner. But the fact is that not everyone can afford a home owing to the ever escalating prices of real estate. To make matters worse, almost all realtors or builders had their own norms, practices and regulations when it came to structuring the builder-buyer agreement, essentially in a manner that best favoured the builder. This left the hard-working common man with very limited means or rights to protect his interest, especially while he was making such a large investment with his life’s savings. Keeping the interest of the home buyer in mind, the Government of India introduced the RERA Act. Let’s understand what is RERA and what it entails.

What is RERA in real estate?

The Real Estate Regulations Act or RERA was introduced in 2016 by the Government of India in order to protect the interests of home buyers. The act was launched so as to provide some much need relief to buyers form the unfair, illegal and unethical practices of real estate builders, which had become common place. Under the RERA Act, the Government has laid down certain norms and regulations for the development of real estate. The norms are also meant to provide home buyers with a sense of transparency when it comes to projects and transactions done in the real estate sector. There are several RERA benefits, with the most prominent one being that that home buyers now have several rights related to property purchase, while property builders and developers are expected to follow certain, mandatory rules and regulations.

Also, there is a specification for the creation of a designated Real Estate Authority and Appellate Tribunal for every state in the country under this Act. Moreover, if a home buyer finds a developer indulging in any wrong doing, there is a provision for home buyers to file a formal complaint with the state’s RERA authority.  

Things to know about RERA

• Builders must disclose every single detail of their various projects on their websites including the plan layout and execution as well as stage-wise completion.
• Project details must be reviewed and edited from time to time to keep potential home buyers updated.
• As per RERA, buyers are expected to pay only for the carpet area of the home they are purchasing i.e. the area within the walls. Builders are not allowed to charge buyers for the super-built-up area which includes stairs, elevators, lobby and balcony.
• Under RERA, builders are also expected to complete the project within the time specified to the buyer.
• 70% of the sums collected from buyers should be transferred into a separate, designated bank account and the sums can only be utilised towards the completion of construction.
• Another RERA advantageis that if the builder is unable to fulfil the commitments made at the time of property purchase, the buyer is entitled to a complete refund and can also claim interest and compensation.
• The building should be free of any defects, at least for a period of 5 years and if any defects are detected, the builder must rectify them within 30 days, at no extra costs.
• The builder and the buyer must resolve their differences within 120 days.
• Builders are not allowed to take more than 10% percent of the property cost as advance before an agreement of sale is drafted.

Having learnt RERA meaning is not enough. As a buyer, you must ensure you learn about it in detail when you purchase your property. Remember, RERA provisions are applicable to both residential as well as commercial properties. The aim of the act is to bring in accountability and transparency in the real estate sector and minimise the rampant delays in projects as well as misconduct by builders.