Know Why RERA Registration Has Now Been Made Mandatory for Housing Agreements

The real estate industry witnessed a substantial alteration with the introduction of RERA Act in 2016. A simultaneous rise in price and demand in the real estate sector led to the launch of the Real Estate Regulatory Authority Act.

While an increased focus is on protecting the interests of homebuyers, this act is bringing transparency in the real estate sector by securing the interest of builders as well. With approximately 42,000 ventures under it along with the registration of roughly 32,000 real estate agents, this act aims to cover all real estate projects across the nation eventually.

Considering that a majority of the population now knows what is RERA, they are probably well-acquainted about the features that it comes equipped with. It is these features that are going to alter the real estate market and hence, make it a mandate for all housing agreements.

For home buyers

The primary aim of RERA Act was to safeguard the interest of home buyers. Its attempt to promote transparency and uniformity in the real estate sector was further established via state-based RERA bodies. This authoritative body took into account multiple issues faced by prospective house owners during the purchase of their house. These include –

• A high-value advance amount
• Problems with the transfer of ownership
• Condition of properties
• The disparity in the cost of properties

While the financial requirements during the purchase of properties can be easily met with a home loan, the other concerns needed the intervention of an authoritative body. It called for the need of RERA that came with these following guidelines for home buyers –

• Uniformity and fairness – Under this Act, properties will be now priced based on their carpet area. It brings in the standardization of prices, hence, eradicating chances of disparity in rates over similar properties.

Additionally, as added benefits of RERA Act for home buyers, individuals are entitled to either of these two options –

1. They can invest in a particular project and gain monthly returns against their investment.
2. Or apply to get returns on their invested amount

• Authorization – Agents are not entitled to the liberty to invest, sell, advertise, build or book a plot without registering with a regulator in charge.

• Quality – Homeowners can register their grievances about any issue faced regarding property within 5 years of acquisition. Any complaints need to be addressed within 30 days by the builder. In case of non-compliance builders will be charged with a hefty penalty.

• Transparency – Builders are required to furnish all original paperwork of the project undertaken. Any changes will need mutual consent from both the buyer and seller.

For real estate agents

For real estate agents, this act lays down guidelines of –

• Security of funds – 70% of buyer’s and investor’s money are kept in a separate account and utilized only for land and construction-related purposes. Builders cannot ask for more than 10% of their property’s cost while signing the sale agreement.

• Uniformity – There will be only one sale agreement model for all builders and homebuyers.

Thus, with a complete guide to understanding the RERA Act in India, homebuyers can draw benefit from the housing purchase. They can further add this up on their earned tax benefit under Section 24 (b) and 80C for principal and interest components of a loan to make the most of their repayments.