5 reasons why RERA brings you closer to your real estate dream

After almost 8 years of deliberation, the Government has finally agreed on implementing the Real Estate Regulatory Act w.e.f May 1, 2017.

The real estate industry in India has always been overvalued with dreams of owning a home continuing to remain a dream for many. The prices of real estate have been outracing the overall growth in income levels. For the few who took the plunge and invested significant earnings, there was another set of challenges. These challenges included problems like late deliveries of possession, arbitrary changes in property layout, illegal construction, misappropriation of money by the builder, abandoning of construction projects and many more. However, RERA is focused on setting things right.

1. Your money is used only to build your home

RERA directs all builders and developers to deposit at least 70% of project funds in an escrow account which would be released only in tandem with the projects’ completion. This is a good move to ensure that a project’s fund is not spread across various other developments which could delay or bring your project completion to a halt.

2. Financial penalties are now bilateral

To further tighten the deadline adherence, RERA would require the builders to pay an interest equivalent to the home loan interest to the buyer for the period of delay in project completion. This would dissuade the builders from intentionally delaying project completion and possession handover.

3. You get what you pay for

RERA mandates all project plans, layouts and proposals to be filed with the RERA authority and restricts the builder from making any change to the project without written consent of all the buyers involved. This ensures that no part of your property is modified to the builders’ advantage and that you receive the project as you had agreed to have.

4. No more misrepresentation

Usage of confusing terms like built-up area and super built-up area to portray a seemingly larger are than actual is proposed to be prohibited. The RERA defines “carpet area” as the only metric to measure total area being offered. This simplifies the understanding process and ensures that the buyer is aware of the real usable real estate.

5. You will now know about the land ownership

RERA is expected to introduce digitization of land titles which would require acquiring history of the land title and convert it into a registry number. This will ensure all land titles are rightly accounted for and are verifiable through a simple registry search. Once the land title is digitized and is pegged to an ID, the owner gets a land title certificate. This means lesser number of land litigations and a simple check for you to know if your money is going into a genuine project.

We expect such an aggressive stance of the Government to boost investor sentiments and clear the industry of dubious builders. We look at RERA as a catalyst to a shift from a shady and opaque industry to an efficient and disciplined industry. While investors can now confidently seek to build their homes, the price of real estate is expected to only go upwards as the act is expected to spur confidence-driven demand.

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