Real Estate Regulatory Authority (RERA)

Fraud, misguidance, and misrepresentation have become common traits in every sector and real estate is no exception. Several buyers have filed complaints against the developers in the past decade looting them and not delivering the projects on time. Various real estate fraud cases, money laundering, false promises, etc., came to light. Plus, the lack of transparency between the developer and buyer was a huge issue. As a result, the government had to establish an authority to protect the interest of home buyers and real estate agents. The authority was named RERA (Real Estate Regulatory Authority).

Since its establishment, the real estate industry has changed drastically. Instances of developers fleeing away with investors’ money have reduced; since then, developers have delivered the projects on time. Keep reading this blog to know more about how RERA has transformed the face of the entire real estate market.

What is RERA?

The Real Estate Regulatory Authority is RERA’s full form. The government introduced the authority to create transparency between home buyers and real estate developers. The RERA authority aims to mitigate issues and discrepancies in the real estate sector.

RERA is regulated by the Real Estate (Regulation and Development) Act, 2016. Under the RERA Act, the regulatory authority is formed in every estate to regulate the real estate sector. Moreover, the Act serves as an adjudicating body for the quick resolution of disputes. RERA has defined specific criteria for developing and building real estate to improve transparency in transactions in the real estate industry.

The body has offered various rights to home buyers and has also defined rules and regulations that the developers and builders must follow stringently.

Importance of Real Estate Regulatory Authority

The real estate sector is one of the leading revenue generators in India. Therefore, some transparent authority must check developers and transactions within the sector. RERA is one such regulation and the government established the authority to revive people’s confidence in India’s real estate market. It offers a common platform for developers and home buyers and mitigates the risks people have faced earlier.

The Real Estate Regulatory Authority is of utter importance as it applies to more than 76,000 companies across India. The act requires multiple things, such as registering real estate agents and projects, which are now compulsory. Today, buyers have all the right to know every basic detail of the real estate project they have invested in. Plus, they also have the right to obtain all the project-related documents.

RERA forms a state authority responsible for governing commercial and residential real estate transactions. It guarantees timely delivery of the project, which has offered a big sigh of relief to home buyers. Plus, it also ensures more precision between the buyers and developers, thereby establishing transparency.

Key Function of RERA

The prime objective of this body is to scrutinise the realty estate industry and adjudicate any discrepancies associated with real estate projects. Given below are some of the key functions of RERA:

• Providing RERA registration
• Maintaining a database of all registered real estate agents.
• Publishing and maintenance of all the registered real estate projects
• Establishing regulations for each state
• Monitoring the compliance of the obligations cast upon the ]real-estate agents, promoters, and allottees under the Act
• Promotion of the real estate sector

Key Benefits Offered by RERA

Following are the benefits offered by RERA:

Trustworthy: With authoritative and strong implementation, RERA can create a robust trustworthy relationship between the developers and buyers. This, in turn, will encourage more investments.

Simplified Procedures: RERA obligates every union territory and state in India to have online registrations. Plus, the documentation process is easy, which saves consumers time.

Grievance Redressal: With RERA, buyers can now have an official authority to register their complaints and grievances about their real estate investments. It allows them to act quickly and make better decisions.

Timely Possessions: One of the major issues customers encounter while investing in real estate properties in India is the fear of delayed possessions. RERA guarantees that buyers receive their projects on time and don’t have to face any possession-related problems.

Transparency: It has always been the biggest concern for the real estate sector. However, with the introduction of RERA and the RERA website going live, people can now keep track of project developments from any corner of the globe. All developers are bound to upload documents and plan layouts on the site. Hence, investors don’t have to worry about their investments.

While there are some loopholes in the Act, a healthy policy change can fuel up the economy. With RERA in place, the realty sector is all set to transform. Also, consumers have benefited hugely by investing in rich markets such as India, especially in metropolitan cities such as Mumbai, Pune, Delhi, Bengaluru, and more.

How will RERA Impact Homebuyers?

With the launch of RERA, the wait is over. Now, buyers can invest without hesitation and be free from worries. We have enlisted some points to showcase how RERA impacts homebuyers in India:

• As per the law, builders must deliver projects on time and there should be no delay in project deliveries. In case of delays, developers have to pay an interest of 2% more than the lending rate of the State Bank of India to the homebuyers.

For instance, Noida has been deemed a hub of Real Estate. If developers fail to keep up to their promises, they will be fined with imprisonment of up to three years.

• One of the major benefits for homebuyers is that they can now savour the liabilities.
• Builders can’t charge for an area outside the walls and buyers will only pay for the carpet area (area within the walls). Also, RERA doesn’t allow builders to charge their consumers for the super built-up space or area.
• The act demands developers of the projects to render complete transparency. The builders must disclose every piece of information related to the project, including layouts, approval, FSI, plan, and all other factors associated with the project.
• Builders can no way charge extra from homebuyers.
• RERA mandates every real estate agent and broker to register themselves, making it easy for homebuyers to verify them, track their records, and add a security level. Earlier, this wasn’t possible.
• If buyers receive the defective house, builders will be held accountable. Under the RERA rules, if the buyer detects any defect within five years from the possession date, the promoter is obligated to rectify them.
• The definition of bare minimum has been adjusted from 1000 Sq. Mt. to 500 Sq. Mt. or a total of 8 flats for regulatory coverage.
• Since the inception of RERA, the redressal of grievances has fastened. According to RERA registration rules, any discrepancies between builders and buyers must be solved within 120 days under the appellate tribunals and regulatory bodies.

Besides, builders must get homebuyers’ permission first if they opt for a design change. Promoters must obtain the approval of at least two-thirds of the homebuyers in a project before they begin restructuring or infusing any design change in multiple units or other structural transformations.

• Buyers get enhanced security. Opening an Escrow account where the developers can park 70% of the funds obtained for that specific project is mandatory. They cannot rotate that money anywhere else. Moreover, developers can only withdraw the fund based on the stages of construction approved by chartered accountants and engineers of builders.

Carpet Area Defined under the RERA Act

Under RERA Act —

“The carpet area is defined as the net usable floor area of an apartment as well as internal walls, which excludes the size of external walls, services shafts, exclusive open terrace and exclusive balcony or verandah area.”

The exclusive here implies that the space on the open terrace is meant for the exclusive use of the allottee. All the builders and developers are obligated to quote the RERA carpet area and not any other area form when selling the property.

In the case of an under-construction project, if the carpet area of the developing property differs (increase or decrease) from the one mentioned in the documents, homebuyers will receive a refund. If there’s a decrease, the builder must refund the additional amount and annual interest. However, if the carpet area increases, a homebuyer must pay more. Nevertheless, RERA has capped an upper limit of the growth at 3%.

How will RERA Impact Real Estate Agents?

RERA has a significant influence on the entire real estate market. Given below are some of the RERA impacts on real estate agents:

• All brokers must register themselves with state-level RERA.
• With RERA in place, setting up a code of conduct for agents is obligatory. Moreover, they must make all their transactions official, thus, curbing unfair trade practices.
• If the brokers don’t get licences, they will be out of the market.
• The cost of developers may increase as no sale can happen until the broker or real estate agents have RERA registration.

The real Estate Regulatory Authority will also concern with the organised real estate sector. For instance, a retail investor investing in an under-construction project for a guaranteed return can now obtain detailed information about the developers’ financial strength rendering the assured return.

In case of defaults, the RERA Act gives authority to regulators to levy fines and detain the defaulter. Also, the detainment can end up to three years of period.

RERA Act in the Different States of India

Until now, almost every state and union territory, except Nagaland, has declared rules regarding the RERA Act, 2016. These states were obligated to frame their rules in sync with the regulation of the Centre, but various dilutions were recorded too. Since there’s an absence of regulatory authority and websites are still not developed, multiple implementation shortfalls exist.

Given below is the list of states that have already implemented the RERA rules and have working websites as well:

What are the Penalties under RERA?

Penalties differ for different entities under RERA. The below-depicted table mentions these penalties separately:

Penalty for Real Estate Agents

The following penalties will apply to real estate agents for the violation of RERA rules:

Penalty for Promoters

If promoters don’t follow the compliances, the authority will impose the following penalties:

Penalty for Buyers

Even the buyers have to pay a fine if they don’t obey RERA rules. The penalties would be:

Applicable Penalties under Applicable Sections of RERA

There are specific offences under RERA Act for which the authority levies the applicable penalties. We have listed below some offences for which penalties are imposed under certain applicable sections of the Act:

How to Register Projects under RERA

Steps to project registration under RERA differ for both promoters and real estate agents. We have mentioned each of them below:

For Promoters

If you are a promoter, you must follow the steps below:

Step 1: Create a checklist of all the required documents and gather them for registration.

Step 2: Get an account statement duly signed and certified by a CA (Chartered Accountant), as per Section 4 (2) (I) (D) of the RERA Act.

Step 3: Obtain a RERA registration form, Form A. Fill it out correctly and submit the application.

Step 4: Under Section 4 of the Act, promoters must declare in Form B.

Step 5: Fill up the draft agreement of allotment or sale of the project, Form G and submit it.

Step 6: Submit an affidavit declaring that the particulars furnished in Form G do not contradict the rules set by the RERA.

Step 7: Another affidavit stating no booking amount has been acquired from prospective buyers and it’s per Section 3 of the Act must be submitted.

Step 8: Pay the required fees for RERA registration, which vary from state to state.

Step 9: Send a duly-signed physical copy of all the required documents through a registered post to the RERA authority of your state.

Step 10: Fill out Form C and submit it to get the registration certificate.

For Real Estate Agents

RERA registration for real estate agents involves the following steps:

Step 1: Get the RERA application form. Fill up and submit it with all the required documents and the registration fees to the authority.

Step 2: You will receive a RERA registration number. You must use this number for every property sale.

Step 3: You must maintain documents, books of accounts, and records pertaining to every transaction every quarter.

Step 4: It’s mandatory to share all the documents and information related to any project with the property buyer.

Step 5: If you commit fraud or misrepresent yourself at the time of registration, your application may get rejected.

Projects That Come under RERA

RERA applies to all real estate projects in India. Every state and its city has different projects. For instance – 102 Eden Estate, DLF Gardencity Enclave, Easy Homes, Ekam, Elan Paradise, Emaar Business District 99, Eldeco Accolade,  etc., are projects registered under HRERA (Haryana RERA).

Likewise, various such projects are registered under state RERA for different places.

Documents Required to Register a Project Under RERA

Document requirements for RERA registration differ for real estate agents and promoters. We have mentioned both of them separately:

As Promoters

Every real estate promoter has to submit the following documents to register their project under RERA:

• The application form for RERA registration
• The commencement certificate and authenticated copy of the approvals from the competent authority
• Particulars of the project launched in the last five years, including their current status
• Copy of layout plan, sanctioned plan, and specifications of the proposed and entire project as approved by the competent authority
• Proforma of the allotment letter
• The conveyance deed proposed to be signed with the allottees.
• Agreement for sale
• Zoning plan
• The latest layout plan, if it’s a plotted colony.
• Copy of the licensed copy along with the schedule of the land
• Cash flow statement of the proposed project
• Demarcation plan
• Non-default certificate from a CA

Other documents as required or requested by the authority.

As Real Estate Agents

As a real estate agent, you have to furnish the following documents to the authority:

• Particulars about your enterprise comprising its name, registered office address, and type of enterprise (company, proprietorship, partnership, society, etc.).
• Details pertaining to registration such as a memorandum of association (MoA), bye-laws, articles of association (AoA), etc.
• Copy of address proof of the place of business
• Copy of PAN card of the agent
• Name, photograph, address, contact details of the agent (in case of an individual); in case of other entities, name, contact details, a photograph of directors, partners, etc. and address.

Grant of Registration

The applicants must file the request for a grant of registration in Form-A and Form-B. The authority usually takes about thirty days from the date of application submitted to grant registration. You will also receive a registration number along with a login ID and password for accessing the website so that you can furnish the details about the project.

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