RERA has put forward a code of conduct for all stakeholders which will bring much-needed transparency in the home-buying process.
Property investment is a need these days and not a luxury. It is one of the most basic requirements and therefore prospective home buyers are endless in numbers. Everyone is on the lookout for the right home in the right location, at the right price. As with all popular products, the ecosystem is reeling with plenty of choices at competitive rates and the buyers are sceptical about the quality and the credibility of the seller. However, they need not worry anymore. With Real Estate Law in place, industry insiders have welcomed a new era of home buying and selling.
Most of the home buyers have wondered if the Real Estate Regulatory Authority (RERA) would actually help them or just be a titular body with no real powers. Well, here’s what you need to know about how RERA spells transformation at every step.
The right information is here
For home buyers, it becomes very important to check the legality of any project. After all, it is a lifetime of savings that go into the brick and mortar, and hence the more you are cautious, the better it is. Taking the right step forward also means that you are keeping away from spending your money on all the legal hassles that may have otherwise cropped up. The different state regulatory authorities display the details of various developers, their projects, approvals from various authorities, encumbrances if any, litigations, delivery timelines, etc. It is mandatory for all developers to comply with the rules of RERA and furnish the right details about their projects. Failure to do so effects severe penalties. RERA has put forward a code of conduct that is applicable to all stakeholders. This will bring the much-needed transparency in the home buying process.
Approach the right developer
Prior to RERA, choosing the right developer was a challenging task. Home buying usually involved browsing through a lot of websites, relying on recommendations from the peer group and family members, dependence on advertisements that could also mislead. With RERA, transparency has seeped into the sector. RERA mandates that no developer can sell even a single unit without registering his project with the regulatory authority. Similarly, any incorrect declaration and false advertisements would also meet strict scrutiny and penalty. In short, the process of shortlisting a developer is far simpler than before as the developer’s track record is easily accessible now. This makes the developer accountable and they will have to deliver as committed.
Structurally effective, relevant
RERA is the perfect intervention at the right time. Project delays have been a menace in the sector with home buyers losing out money due to the lags in the construction schedule. RERA thus became a game changer introducing several structural corrections and enforcing them too. Check for yourself:
=> Provision of a separate account: Developers dilly dallied mainly due to the shortage of funds or fund diversion. To address this issue, RERA mandates that every developer firm should maintain a separate account with funds that must be used only for a specific project. Every withdrawal from this account needs to be verified by an architect or a structural engineer and a chartered accountant who would certify that the withdrawal is in proportion to the percentage of completion of the project. This provision that never existed before has been a structurally enriching rule.
=> Compliances and enforcement: Every stakeholder is bound by strict rules. Deviations would be pulled up by the Authority or the Appellate Tribunal and penalties to the tune of 10% of the project cost and imprisonment up to 3 years are also possible. This helps a home buyer, given that it keeps the developer in check. Previously, there was no such enforcement.
=> Death of the pre-launch: Pre-launches meant that developers could advertise their product way before adhering to any compliances. Today, with the provision of pre-launches ending, the opportunity to enter the market at lower costs may have ended too, but at least it has done away with the fear of a home buyer who buys into a pre-launch apartment, and the fly-by-night developer escapes unscathed. Previously, developers could raise funds from prospective homebuyers. Now, the entire corpus to buy land, initiate approvals, etc., must come from the developer.(The writer is Group CFO, Housing.com, PropTiger.com and Makaan.com)