One of the most globally recognized sector i.e. the real estate sector ranks 3rd among the 14 major sectors in the country in terms of direct, indirect and induced effects in all sectors of the economy. The Real estate sector is an important pillar of the economy fulfilling the demand for infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism, standardization and lack of adequate consumer protection. Though the Consumer Protection Act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and not adequate to address all the concerns of buyers and promoters in the sector. The real estate industry had been crying out to get regulated since more than past one decade.
In view of the above, the Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted by MODI Government with the objective of protecting the interests of buyers and simultaneously boosting the investment in the real estate industry. It further aims to ensure transparency, fair-play and reduce frauds & delays in the real estate sector. The Act also imposes certain responsibilities on builder/promoter and homebuyers/allottees, introducing professionalism and standardization in the sector. Apart from the above, the RERA has the following features:
a) To establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector as a whole.
b) To ensure transparency in sale of plot, apartment, villa, shops, etc as the case may be.
c) To establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions
or orders of the RERA
d) Establishes state level regulatory authorities called Real Estate Regulatory Authorities (RERAs)
e) Promoters cannot book or offer units in the projects without registering the project with RERA.
f) Registration of the projects covering lands having area more than 500 sq. ft. or where the number of apartments is eight or more is mandatory. The promoter is required to upload the lot of details of the project on the website of the RERA to be examined by public at large.
g) 70% of Amount collected from homebuyers for a project must be maintained in a separate bank account (escrow account) and must only be used for construction of that project.
h) Right to Legal Representation on behalf of Client by Chartered accountants, Company Secretaries or cost accountants or legal practitioners
i) Imposes stringent penalty on promoter, real estate agent and also prescribes
j) Imprisonment for certain defaults so now builder cannot think of cheating to the homebuyers.
k) Uniformity in definitions for important components of real estate, like, 'carpet area', common areas' etc.
l) Fast-track dispute resolution mechanism
m) Timely completion of the projects by the builders