RERA Act Explained: What Every Buyer Should Know
The Indian real estate sector has long been plagued with issues such as project delays, lack of transparency, and legal ambiguities. In response to these challenges, the Government of India introduced the Real Estate (Regulation and Development) Act, 2016, commonly known as the RERA Act. This landmark legislation has brought significant reforms to the real estate industry, aiming to protect homebuyers and promote fair practices among developers. If you’re planning to invest in property or purchase a new home in India, understanding RERA is crucial. In this blog, we will explore everything you need to know about the RERA Act. What is the RERA Act? The RERA Act came into force on May 1, 2017, with the primary objective of regulating the real estate sector and ensuring transparency, accountability, and efficiency in project execution. It applies to both residential and commercial real estate projects. RERA mandates that all real estate projects above a certain size must be registered with the respective State RERA Authority before they can be marketed or sold. Builders and developers are required to provide detailed project information on the RERA portal, making it easier for buyers to make informed decisions. Key Objectives of the RERA Act Key Features of the RERA Act 1. Mandatory Registration All real estate projects with a land area exceeding 500 sq. meters or more than eight apartments must be registered under RERA. Without registration, developers cannot advertise, sell, or book units in these projects. 2. Transparency in Project Details Developers are required to upload key project details including layout plans, approvals, land title status, and timelines on the RERA website. This information must be regularly updated. 3. Timely Project Completion RERA imposes strict deadlines for project delivery. If a builder fails to deliver on time, they are liable to pay interest to the buyer for the delay. 4. Advance Payment Limit Promoters cannot demand more than 10% of the property cost as an advance before signing a sale agreement. 5. Separate Escrow Account Developers must deposit 70% of the project funds collected from buyers into a separate escrow account. This amount can only be used for construction and land-related costs, minimizing the risk of fund diversion. 6. Penalties for Non-Compliance Developers and agents who fail to comply with RERA regulations face heavy penalties, including imprisonment in severe cases. 7. Grievance Redressal Buyers can file complaints against developers with the RERA Authority. The authority is required to address grievances within a stipulated timeframe. Benefits of RERA for Homebuyers Impact of RERA on Developers While RERA has empowered buyers, it has also brought developers under a strict regulatory framework: However, developers also face challenges such as increased compliance costs, longer project planning phases, and stringent penalties for delays. How to Check Project Details on the RERA Website This transparency allows buyers to verify a project before investing. Common Misconceptions About RERA Tips for Buyers Under RERA Conclusion The RERA Act is a game-changer for the Indian real estate sector. By making the system more transparent, accountable, and buyer-friendly, it has instilled greater confidence among property buyers. Whether you’re a first-time homebuyer or a seasoned investor, understanding the provisions of RERA can help you make smarter, safer, and more informed real estate decisions. For more updates and expert guidance on Indian real estate, stay tuned to our blog!