How RERA Benefits Homebuyers in India

RERA (Real Estate Regulatory Authority) in India

Buying a home is a significant milestone. Historically, the Indian real estate market was not well-regulated and home buyers had to deal with malpractices. The builder-buyer agreements were also structured more in favour of the builder. Additionally, due to the industry being intensely competitive in attracting prospective homeowners, there were gaps between the promise and the delivery.

RERA (Real Estate Regulatory Authority), introduced in 2016, was established under the Real Estate (Regulation and Development) Act. It has significantly improved the real estate sector in India. It aims to protect homebuyers by ensuring transparency and accountability from developers. For aspiring home buyers, understanding RERA is crucial for informed decision-making. Essentially, RERA acts as a safeguard for consumers, promoting fair practices in the real estate market. Let us further explore RERA benefits for home buyers, documents required for RERA registration, and much more.

Table of Contents

• What is RERA?
• Purpose and objectives of RERA
• Features of RERA
• Documents needed for Registration under RERA
• Key provisions of RERA and their impact on homebuyers
• How RERA empowers homebuyers in India?
• Conclusion
• FAQs

What is RERA?

RERA is a legal framework established in 2016 to enhance transparency and protect the interests of home buyers. It requires all real estate projects to be registered, compelling developers to publicly share detailed project information, such as layouts, approvals, and timelines. This law helps reduce the risks of delays and fraud, enhancing buyer confidence.

Providing clear details about projects helps home buyers make well-informed decisions. RERA benefits also include mechanisms for the quick redressal of disputes between buyers and builders. This also increases buyer confidence and sets standards for developers to follow.

Purpose and objectives of RERA

Protecting home buyers: RERA ensures the protection of home buyers by enforcing fair practices, providing timely information, and prompt resolution of disputes.

Enhancing transparency: The act mandates developers to fully disclose key project details including timelines, legal approvals, and financial status, enabling buyers to make informed decisions.

Regulating industry standards: RERA sets strict guidelines and standards for real estate developers to ensure quality construction, adherence to agreed timelines, and compliance with specified norms.

Establishing regulatory authority: It creates an independent body responsible for overseeing the real estate market, enforcing regulations, and resolving disputes efficiently.

Monitoring real estate entities: RERA has the authority to register and regulate real estate brokers and developments, ensuring they meet legal standards.

Maintaining documentation: The authority keeps comprehensive records of projects available for public scrutiny, including details and images of promoters/enterprises/agents with cancelled licenses.

Controlling advertising: It ensures that promotional materials by developers are accurate, preventing misleading claims.

Features of RERA

Some of the most important features that enhance RERA benefits for home buyers are:

Quick dispute resolution: RERA makes dispute resolution faster by using a special tribunal and officers to settle disagreements.

Mandatory project registration: All real estate projects must register with RERA, which can reject registrations if guidelines are not followed.

Compensation for losses: Promoters are liable to compensate buyers for losses due to defective title claims, with no cap on the compensation amount stipulated by law.

Right to file complaints: Individuals can file complaints with RERA against promoters, buyers, or agents violating the Act’s provisions.

Authority to halt activities: During investigations, RERA can prohibit any party from continuing activities that are under complaint.

Penalties for non-compliance: Promoters face penalties of up to 5% of the project's estimated cost for not complying with RERA's orders. Further non-compliance with the Tribunal’s orders can lead to up to 3 years of imprisonment or a fine of up to 10% of the estimated project cost, or both.

Corporate accountability: If an offence is committed by a company under this Act, both the person in charge at the time and the company itself are held liable.

Documents needed for Registration under RERA

The documents required for RERA registration can vary slightly depending on the registering entity and specific state regulations.

Here is a general overview of documents to be submitted by developers when registering a new project:

• Promoter identification and proof of the promoter's residence.
• Contact information: Identification number and email ID.
• Project plans: Start certificate, sanction plan, and detailed arrangement plan.
• Project details: Precise location, proposed execution timeline, and parking space availability within the project.
• Land ownership proof: Documentation verifying the promoter’s title to the land designated for the project.
• Promoter’s track record: Details of any previous projects handled by the promoter, including titles, progress updates, and records of any delays.

Some additional documents required for promoters who are companies are:

• Company documentation: Certificate of Organisation.
• Registration numbers: CIN and TAN numbers.
• Financial Records: Audited financial statements for the last 3 fiscal years, audit report, and director’s report.
• Management details: Information about the directors or any persons in a position of authority.

It's recommended to visit the official RERA website for your state for the most up-to-date and accurate information.

Key provisions of RERA and their impact on homebuyers

Under the RERA Act, there are key provisions aimed at protecting homebuyers and ensuring fair play in the real estate sector:

1. Project registration 

Developers must register projects with RERA before marketing or selling, providing details like land title, plans, and project status.

2. Mandatory disclosure 

Project information, including specifications and carpet area, must be shared on the RERA website, and any changes must be disclosed to buyers.

3. Escrow account 

Developers are obliged to deposit at least 70% of the funds from buyers into a separate account for the project's construction.

4. Carpet area clarity 

Unit sales must be based on carpet area, which should be clearly mentioned in agreements and advertisements. Earlier, there was no standard formula to calculate the carpet area. This has now been rectified through RERA to prevent confusion for buyers.

5. On-time completion 

RERA stresses on-time project completion, with penalties and compensation for delays enforced against developers.

6. Regulation of agents 

Real estate agents must register with RERA, providing accurate project and commission details.

7. Grievance redressal 

RERA allows buyers to file complaints against developers or agents, with state Real Estate Appellate Tribunals addressing disputes.

How RERA empowers homebuyers in India?

RERA ensures that developers share complete and accurate project information, allowing buyers to make decisions based on trustworthy data. By mandating a state authority to settle disputes and ensuring buyers have access to crucial project documents, RERA aims to protect the buyers’ rights.

Establishing strict guidelines and penalties for project delays offers assurance of timely delivery to homebuyers. Further, the Act prevents misleading claims and ensures developers get all necessary clearances, reducing fraudulent practices in real estate.

Apply Now

Conclusion

RERA has transformed the real estate landscape in India, offering more leverage in the home-buying process for aspiring homeowners. By ensuring transparency, accountability, and timely project delivery, RERA protects buyers’ rights and enhances their confidence in investing in property. It establishes a more structured and reliable market, with features in place for addressing grievances efficiently.

Thinking of buying a new home? Get one step closer to your dream with feature-rich home loan  solutions from SMFG Grihashakti. Eligible applicants can enjoy attractive interest rates, home loans of up to INR 1 crore*, and a flexible tenure of up to 30 years*. The minimum CIBIL score for home loan applications at SMFG Grihashakti is 700. Check out the rest of our eligibility criteria and apply for a housing loan online today!