Top 8 provisions in RERA guidelines for homebuyers' peace of mind

What if buying a home isn't stressful any more? Imagine if the process is more seamless, transparent and secure. All the hard-earned money is protected, buyers' interests are prioritised and there are fair practices every step of the way.

Welcome to the transformative era of RERA, the Real Estate (Regulation and Development) Act, which is reshaping the landscape of the Indian real estate market and empowering homebuyers. The legislation instilled a sense of transparency, accountability, and efficiency in the industry.

Let's look at how RERA guidelines safeguard homebuyers through the key provisions.

1. Mandatory property documentation

   According to Section 4 of the RERA Act, developers must submit essential documents like the land approval and allotment letter, agreement for sale, conveyance deed, and more. This requirement ensures that all builders are legally bound to deliver critical property documents to buyers, thus enhancing trust and transparency in the process.

2. Developer's credibility

   Section 4 also mandates the disclosure of the developer's project details for the last five years, including their completed and ongoing projects. This also includes the completion status and any pending legal cases on any of the projects under the builder's portfolio. Since this information is required to be submitted during the application for registration, buyers get a clear picture of the developer's reliability in the industry.

3. Financial security

   According to Section 4 (2)(I)(D), developers need to deposit 70% of the funds received from buyers into a separate escrow account with a scheduled bank. A real estate company can only use the funds for construction and land costs. This prevents misuse of funds and protects the buyers' investments. In case a developer violates this provision, it can lead to penalties.

4. Duties of the promoters

   In Section 11 of the RERA Act, 2016, the promoter duties are outlined, which include:

   • Executing a registered conveyance deed of the flat, plot, or building in favour of the buyer
   • Obtaining the completion and occupancy certificate from relevant authorities and providing it to the owners

5. Standardised carpet area

   Before RERA guidelines were applied in the industry, the calculation of carpet area varied amongst developers. As a result, it led to inconsistent property prices. Now, the Real Estate Regulatory Act provides a standard definition and calculation method for carpet areas. This ensures uniformity and prevents arbitrary price hikes.

6. Parity in interest rates

   Prior to the Real Estate Regulatory Act, there was no uniformity in interest rates for payment defaults. However, with RERA, there's a mandate that interest rates on default must be the same for both parties involved. This results in fairness, as buyers earlier faced higher interest rates on defaults compared to the interest paid by developers in case of delayed possession.

7. Cap in advance payment

   According to Section 13 (1) of the RERA Act, 2016, developers and promoters cannot accept more than 10% of the home's cost as an advance or as application fees before they sign the sale agreement. This provision also protects buyers from various malpractices that were common before RERA.

8. Buyer rights

   One of the biggest advantages of opting for RERA-approved projects is that it offers various rights to home buyers. For instance,

   • Delay in possession: In this case, buyers can withdraw from the housing scheme and demand a full refund with interest from the due date till the amount is refunded. They can also choose to continue with the home and receive compensation with interest till the project is completed and possession is given.
   • Post-possession defects: According to Section 14 (3), if any structural defect, quality defect or defect in workmanship or service is discovered within five years of possession, the developer must rectify it within 30 days at no extra cost. Home buyers are entitled to compensation if the builder fails to do so.

The RERA Act of 2016 has been instrumental in protecting home buyers and ensuring a fair, transparent, and accountable real estate sector. Its provisions safeguard buyers' investments, promote timely project completion and ensure the quality of construction. By standardising processes and enforcing strict regulations, RERA has significantly improved the home-buying experience, making it more secure and trustworthy.