RERA is intended to protect homebuyers and the real estate landscape. Learn all about RERA projects, registration, approval criteria, benefits, and more.
What is the need for RERA-approved projects? As the economy changes, regulations must be implemented in all sectors to ensure that no crime or fraud occurs. While some regulatory authorities, such as TRAI (Telecom Regulatory Authority of India), RBI (Reserve Bank of India), and SEBI (Securities and Exchange Board of India), are currently present and handle issues related to their respective sectors, there was no single authority to oversee the real estate industry. This is no longer the case.
The RERA Act was passed in 2016 to establish rules and regulations for the real estate industry. RERA-registered projects ensure transparency between buyers and sellers, making the process of buying and selling a home much easier.
What Does RERA Stand For?
The Real Estate Regulatory Authority, or RERA, was established under the Real Estate (Regulation and Development) Act of 2016 to regulate the real estate industry and address homebuyers’ concerns.
A year after the RERA Act was established, Maharashtra created its own version known as MahaRERA. After that, many other states followed suit, including Himachal Pradesh RERA, RERA Chandigarh, Tripura RERA, and others.
The RERA Act: RERA Approval & Its Advantages
Some of the important RERA-approved project benefits are:
Allottees are notified of minor additions or changes.
Any other additions or changes must be approved by two-thirds of the allottees.
There is no launch or advertising before RERA registration.
A transfer of majority rights to a third party requires the consent of two-thirds of allottees.
The project plan, layout, government approvals, land title status, and subcontractors are all discussed in complete transparency.
Increased emphasis on project completion and timely delivery to customers.
A five-year defect liability period leads to improved construction quality.
RWAs are formed within a specific time frame, usually three months after the majority of units have been sold.
Key Highlights of RERA approved projects
The RERA Act creates a unified legal framework for purchasing flats, apartments, and other real estate. Thus, RERA approval is required to standardize real estate practices across the country. Here are some of the characteristics of RERA-approved projects:
Establishment of a regulatory authority:
The real estate sector has long lacked a proper regulator (similar to the Securities Exchange Board of India in the capital markets). The Act establishes a separate Real Estate Regulatory Authority for each state and union territory. Its responsibilities include protecting stakeholders’ interests, collecting data in a designated repository, and developing a strong grievance redressal system. To avoid time delays, the authority has been mandated to dispose of applications within 60 days, which can only be extended if a reason for the delay is provided.
Compulsory registration:
According to the Central Act, any real estate project with a total area of more than 500 square meters or more than eight apartments proposed for development in any phase must be registered with the RERA of the respective state. Existing projects without a completion certificate (CC) or occupancy certificate (OC) must also meet the Act’s registration requirements. When registering, promoters must provide detailed information about the project, such as land status, promoter details, approvals, completion schedule, and more. The project can only be marketed once all registration and construction-related approvals have been obtained.
Reserve account:
One of the most common causes of project delays was that funds collected from one project were always diverted to fund new, unrelated projects. To avoid such a diversion, promoters must now hold 70% of all project receivables in a separate reserve account. The proceeds of such an account can only be used to cover land and construction costs, and they must be certified by a professional.
Continuous disclosures by promoters:
Following the Act’s implementation, home buyers can monitor the progress of RERA-registered projects via the RERA website. It is the responsibility of promoters to provide timely updates to the regulator on the status of the project.
Title representation:
Promoters must provide a positive warranty on their proper title and interest in the land, which the home buyer may use against them later if a title defect is discovered. Furthermore, they must obtain insurance against the title and construction of the RERA-registered project, with the proceeds paid to the allottee upon execution of the sale agreement.
Standardization of sale agreement:
The RERA Act requires both promoters and homebuyers to sign a standard model sale agreement. Typically, promoters include punitive clauses that penalise home buyers for any default, while similar defaults by the promoter result in negligible or no penalties. However, such punitive clauses may be a thing of the past, and home buyers can anticipate more balanced agreements in the future.
Penalty:
To ensure that violations of the RERA Act are not tolerated, violators face stiff monetary fines (up to 10% of the project cost) and imprisonment.
What Projects Are Eligible For RERA Approval?
The following projects are eligible for RERA approval:
RERA-approved projects include both commercial and residential developments, as well as plotted developments.
Projects registered with RERA must be larger than 500 square meters (8 units).
Assume that the project is solely for renovation/repair/redevelopment and does not include re-allotment, marketing, advertising, selling, or new allotment of any apartments, plots, or buildings in the real estate project. In that case, it will be ineligible to become an RERA-approved project.
Each phase will be treated as a separate real estate project, requiring a new registration.
Carpet Area Set Out Under RERA Act
The Real Estate (Regulation and Development) Act of 2016 establishes a few guidelines for developers to sell their apartments based on carpet area:
According to the Act, carpet area refers to the total floor area used within the apartment walls. This excludes areas such as shafts, balconies, and terraces.
The defined carpet area helps to protect buyers from being misled by fraudulent promoters.
Because the loading factor is high, the developer can increase the saleable area. This allows the developer to reduce the rate per square foot for the inflated saleable area. The developers mislead homebuyers by giving them the impression that they are getting incredible rates, and they become excited about it. However, the flat size remains constant; only the loading factor varies. Going the traditional route for carpeted areas will provide assurance of usable space. This also aids in the analysis of cost per square foot and facilitates comparisons of various projects.
Procedure For RERA Registration
To register a project under RERA in India, follow the steps outlined below. This is a brief outline, and the steps may vary depending on the project.
Online Application – Developers must visit the website of their state’s RERA authority and register their project online. During the registration process, developers will be required to submit the necessary information and documents.
Fee Payment – To complete the registration, developers must pay the registration fee, which varies by state.
Document Verification – Once the registration is complete, the authorities will take some time to verify the documents provided by the developers, including their personal information, qualifications, and criminal history.
Certificate Issuance – Once the documents have been verified, the developer will be issued a registration certificate.
Benefits Of RERA Approval
There are numerous benefits to RERA registration. When you receive RERA approval for your projects, you are eligible for the following benefits:
Financial Security – RERA-approved projects are financially stable. RERA requires developers to hold a portion of the project’s funds in an escrow account. An escrow account means that the funds are held by a third party for protection.
This escrow account is only used for construction and ensures that your funds are invested properly. Even if financial transactions are delayed, RERA ensures that the project will continue.
Carpet Area and Pricing – RERA provides a secure option for homebuyers by clearly defining the carpet area. Developers are required to sell properties solely based on carpet area, and they cannot trick buyers into paying more. This reduces additional costs while maintaining trust in the system.
Structural Defects – RERA requires developers to repair any structural defects that may arise in the building after the buyers have moved in. This means you can ask the developers to fix any problems that arise in the building for a set period of time after you move in. RERA keeps an eye on projects after their completion and asks the developers to be accountable for any structural issues that might be present.
Protection Against False Advertisements – RERA requires property developers to only provide information that is factually correct. This means that developers cannot exaggerate the facilities they provide, and they must be completely transparent when making property-related claims.
Conclusion to RERA-approved projects
In the real estate industry, RERA serves as the buyer’s Superman. The days of the buyer going through one municipal record after another to ensure the legitimacy of their investment are over. The revolutionary Act paves the way for a more level playing field. RERA-approved projects ensure fair trade between buyers and sellers.
