The Real Estate (Regulation and Development) Act enforces a set of consumer-centric laws to compulsorily prescribe the registration of all real estate projects. The Act imposes a range of measures and penalties on those real estate promoters and developers who flout the measures of transparency and timely completion of projects to protect the interest of home owners and buyers.
For those who apply for Home Loan after May 1, 2017, as well as those who already have a Home Loan, RERA seeks to improve the overall experience of buying a new home. Some benefits that the Act will introduce are as follows:
Improved Transparency: With regulations governing real estate activities, the Act seeks to make home owners and buyers aware of the practices of builders and other parties involved in the real estate process. This will also improve the discipline of the builders working on projects due to the increased clarity.
Healthy and Equitable Relationships: The Act will lead to improving the trust between developers and homebuyers, taking into account deadlines for possession of the house, payments and other transactions between the two parties.
Increase in Demand: With improved confidence of the consumers in the process, it will increase a demand for homes in the Indian market, thus boosting the real estate industry.
Provisions Offered by RERA
The successful regulation of RERA opens up a range of provisions for consumers. These are as follows:
- A separate escrow account has to be maintained by any promoter of a real estate development firm.
- A total of 70% of the money from investors and buyers is to be deposited in the account and be available for use only for land purchase and construction.
- According to this Act, it is mandatory for builders to submit the original approved plans for projects and provide details of the revenue collected, the way funds are utilised, the timeline for completion and more to bring more transparency to the process.
- It will be the responsibility of each state regulator to register real estate projects and real estate agents operating in their state under RERA. The details of all registered projects will be put up on a website for public access.
Issues to be Addressed by RERA
- Initially the risk of non-completion of the project and delays were borne by the customer, but RERA ensures that these costs are to be borne by the developer.
- Earlier regulatory authorities had a limited role in the whole process. However, RERA has given regulatory authorities the right to intervene, thus bringing more accountability into the picture.
- RERA has also helped address delayed delivery caused by diversion of funds to new projects. The Act enforces developers to create separate accounts for each project, and use funds in each separate account only for a single project.
If you are looking to take a Home Loan or a joint Home Loan to buy your dream home, RERA makes your home buying experience much more transparent and clear. It puts the responsibility of completing the construction on deadline on the shoulders of developers and builders, charging penalties in case of delays. It also ensures that homebuyers get what they are initially promised by builders and increases accountability, bringing fair practices to the otherwise unorganised real estate sector.
With RERA coming in practice from May 1, 2017, in a few cities across India (with more to join by the end of the year), the time is ripe for you to consider buying that dream home. Before taking a loan, make sure to check your lender’s credentials and the value of your home. Use a Home Loan Calculator
like this one to calculate your EMI to see how much you can afford to pay and check your CIBIL score to make sure you will get a low interest on your Home Loan.
In your search for the right Home Loan, choose a trustworthy lender like Bajaj Finserv, who offers different types of Home Loan to suit various needs.