The Real Estate Regulatory Authority Bill (RERA) has been passed by the central government. It was long overdue and it now provides homebuyers with a uniform code of regulations across the country. While implementation will take sometime, as each state will have to institute its own regulator and appellate tribunal, over the course of the next year the process of buying a house will become simpler and more investor-friendly.
Over the last several months, I have spent a lot of time talking about the need for each customer to do background checks on the developer before signing anything. The problem, until now, was the lack of information available in the public domain about projects, permissions and the financial ability of the developer to complete a project.This lead to a whole host of problems, where project plans were changed during the life of the project, developers who over leveraged and ran into financial trouble would divert funds away from projects delaying construction and, finally, projects without requisite permissions would come to a grinding halt.
Under the new regulator, all developers will have to upload every detail of their project’s plans, specifications, financial health and permissions on the website of the regulator before the sales can begin. This will give all customers a verified source of information on any project in the country before they decide to buy. Any change in the plan of a building will need the approval of two thirds of the buyers. Builders will also need to put 70% of the money raised from sales of a building into a separate bank account. This money cannot be diverted to any other project and should be used exclusively for the construction of the project in question. This rule will limit financial trouble for a project to a great extent.
Even more useful will be the website’s list of past violators.Names of companies that violate the rules of the regulator will be put up on the website, so that customers know which developer to trust.
According to me, the next most important change that the regulator will bring about is the tribunal -a special court in each state that will deal exclusively with cases between developers and customers. The tribunal is required to settle cases and disputes within a time frame of 60 days. Right now as the system stands, an unhappy customer needs to approach the consumer court, which could take up to five years to pronounce a judgment. Having a court exclusively dedicated to the thousands of real estate cases across the country, will ensure speedy decisions, helpful for both customers as well as developers, whose projects will not be held up for long periods of time by notices from courts.
Finally, the clause against discrimination that was added in the Rajya Sabha during the debate on the bill, states that no building or society can deny residence to a customer based on caste, religion, sexual orientation.
This is a mature and much needed law that will protect the rights of minority citizens across the country.
As homebuyers, we can now look forward to a market where we are far more empowered. Finally, we have a regulator looking out for our rights.