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Alisha | 20 Feb 2023

Implementation Of The RERA Act In Real Estate

Implementation Of The RERA Act In Real Estate

Buying a home is every person’s dream, and it takes huge savings to fulfil the dream. Moreover, the home buying process in India wasn't as transparent and sorted as it has become today. A couple of years ago, the real estate sector in India lacked a proper structure. The real estate developers had their ways of working and dealing with the property buyers. The practices were sub-standard and often caused headaches to the consumers.​

From receiving sub-standard quality to delay in possession of the property, issues faced by a buyer in real estate were numerous. Hence, the Act of RERA (Real Estate Regulatory Authority) was introduced and implemented by the government in 2016. The sole objective was to protect the rights and safeguard the interests of the property buyers. The Act ensures that the consumers are not exploited by the developers or fall victim to any other malpractices.

Also Read: Rights and Duties of Homebuyers Under Rera

What are the positive changes brought by the RERA Act?

  • Due to the lack of standard norms in real estate, every developer followed a different method of calculating the carpet area of a flat. With the implementation of the RERA Act, carpet area is now defined as ‘the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’.

  • A buyer has the right to withdraw from a project that he/she feels doesn't live up to the commitments made by the builder. In such cases, the buyer is also entitled to a full refund of the amount paid as advance or otherwise along with interest and claim compensation. In terms of advance payment, the builder is allowed to take not more than 10% of the cost of the property.

  • The structural defects if found within five years after the possession of the apartment, the builder will have to fix them within 30 days at no extra cost. In case the builder fails to complete and hand over the property to the buyer on the due date, the buyer can either withdraw from the project with the right of receiving a full refund along with interest payable or can continue with the project wherein he/she will be entitled to compensation.​

  • It is normal for developers to indulge in the practice of constructing several projects simultaneously, and while doing so, they often divert the funds raised from Project A to fund the construction of Project B. The Act of RERA has put a full stop to this practice, and the developers are now liable to deposit 70% of the amount meant for a specific project in a separate bank account. ​

  • RERA also clearly states that the interest rate remains the same for both parties in case the buyer is found at default in payment or the developer fails to complete the project on time. Such was not the case before RERA. The interest paid by the buyer to the developer was high whereas the interest paid by the developer to the home buyer was relatively less.​

Also Read: Rera Act Features and Benefits


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