Investing in real estate is a daunting task for several reasons; one of the primary reasons being the laws of real estate market that buyers are oblivious to. That is the reason for the out spurt of a multitude of concerns in the minds of first-time property investors.
Often disputes arise among the buyers and sellers in the real estate market which were earlier taken care under different platforms like The Indian Contract Act, The Consumer Protection Act, 1986 and The Competition Act, 2000. The absence of the specific law for the protection of the real estate investors made the Government of India formulate the Real Estate (Regulation and Development) Bill, 2016 that was initiated in the year 2013.
Here are highlights of the law that offers higher security to the buyers, and also provides a better scope for the property dealers to earn the confidence of the consumers:
For Project Developers:
- The Act makes it compulsory for all the real estate projects, whether commercial or residential, to register with Real Estate Regulatory Authority (RERA) for launching a project over 500 square meters or eight apartments.
- For the projects that are under construction and have not received the certificate of completion must get the project registered under the act within a span of 30 days.
- Failure to register will cost the project holder a penalty of up to 10% of the expense of the project or an imprisonment of 3 years.
- The real estate project developers are required to outline all the information on the layout plan of the project. In case, any plan for change is initiated, it becomes necessary for them to seek for approval of the buyers. They cannot make changes without consulting their potential customers.
- They are also required to maintain an escrow account in which 50% of the funds involved in the project will be deposited. Thus, offering protection to the funds of the buyers from getting used in other real estate projects.
- The buyer should be an adult, i.e.18 years old or above.
- He/she should be of a sound mind and possess a history of no offense.
- According to the Act, 70 percent of the buyer’s money will be deposited into bank accounts through cheques. It certainly avoids the customer’s money from being labeled as unaccounted money that gets pumped into real estate market.
- The best benefit of the project is that the builders cannot quote prices for the property on a built-up area, but the carpet area including the spaces like toilets and kitchens.
Buyers often get vexed with the procedures associated with property purchase and selling decisions. They have to go through several builders to make a significant property decision. But, with the laws framed by RERA India, buyers are under a security blanket and are likely to experience enhanced transparency in the housing market.
The main objective of the act is to guard the buyers’ interests. That said, it has successfully brought a ray of hope and happiness for the buyers.