RERA Act - Everything you need to know

The RERA Act was enacted in 2016 to protect home buyers from getting exploited at the hands of the builders or promoters. It covers all the ongoing as well as upcoming projects in both residential and commercial setups. Here are some salient features of the Act that would help you understand it better.

1. Applicability: As already discussed, it is applicable to ongoing projects as well, even those that have not received any completion certificate. However, it does not take into the repairs or renovation done on already completed projects. For residential projects, the registration is mandatory for those properties that have a minimum of 500 square meters or more than 8 apartments, thereby ensuring that even small promoters are also covered under this Act.
2. Separate Project Escrow Account: According to the Act, a promoter has to deposit 70% of the funds into an escrow account that can only be used for project-related expenses after the authorisation of the chartered accountant, project engineer and architect.
3. Full Disclosure of the Project: The promoter has to prepare a regular progress report of the project and update it regularly so that that buyer is well-aware of the timeline. This also makes it easy for the buyer to plan their finances be it taking a home loan or arranging for funds from any other sources.
4. Carpet Area: With this Act, the apartments can be sold only on the basis of carpet area. Moreover, if there is a decrease of 5% or more in the carpet area, the promoter would have to return the prorated amount to the customer.
5. Addition and Alterations: There can be no addition or alterations in the design or structure of the project done without an authorisation from the project engineer or architect. Furthermore, in the case of major changes, the consent of 2/3rd allottees affected by the change would be necessary.
6. Offences and penalties: Not following the guidelines mandated in the Act can attract penal actions that can either be a fine or imprisonment.
7. Redressal mechanism: The Act also provides for setting up a Real Estate Appellate Tribunal that would dispose of all the complaints within a limit of 60 days. However, a promoter has to deposit 30% of the penalty amount or higher to appeal in the tribunal.

With RERA in place, buying a property has become safer and transparent.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.