RERA stands for the Real Estate (Regulation and Development) Act, which is a law enacted by the Government of India in 2016 to regulate the real estate sector in India. The main objective of RERA is to protect the interests of homebuyers, promote transparency and accountability in the real estate sector, and establish a regulatory framework for the timely completion of real estate projects.
Under RERA, all real estate projects are required to register with the state Real Estate Regulatory Authority, and developers are required to provide detailed information about their projects, including land title status, project approvals, project layout, and schedule for completion. Developers are also required to deposit a portion of the project funds in a dedicated escrow account, which can only be used for the construction of the project.
RERA also mandates that developers must adhere to strict guidelines and timelines for project completion and delivery. In case of any delay or default, developers are required to pay compensation to homebuyers at a predetermined rate.
RERA has brought significant changes to the real estate industry in India, by introducing a standardized process for project registration and completion, increasing transparency, and providing a grievance redressal mechanism for homebuyers. The act has helped in restoring consumer confidence in the real estate sector and has made it more organized and transparent.
The key features of RERA are as follows:
1. Mandatory Registration: All real estate projects, including residential and commercial, with more than 500 sq. m. or 8 apartments, are required to be registered with the respective state RERA authority before they can be marketed or sold.
2. Transparency: RERA requires developers to provide detailed information about their projects, including land title status, project approvals, project layout, and schedule for completion. This information must be made available on the RERA website for public viewing.
3. Standardization: RERA introduces standardization in real estate practices, by mandating the use of standard agreements, carpet area definition, and disclosure of project details.
4. Escrow Account: Developers are required to deposit a minimum of 70% of the project funds in a dedicated escrow account, which can only be used for the construction of the project.
5. Timely Completion: RERA mandates that developers must adhere to strict guidelines and timelines for project completion and delivery. In case of any delay or default, developers are required to pay compensation to homebuyers at a predetermined rate.
6. Grievance Redressal: RERA provides for the establishment of state-level Real Estate Regulatory Authorities (RERAs) and Appellate Tribunals, which provide a quick and efficient grievance redressal mechanism for homebuyers.
7. Promoting Quality: RERA mandates the use of quality construction materials, and also provides for the establishment of a quality control authority to monitor the quality of construction.
Overall, RERA aims to promote transparency, accountability, and timely completion of real estate projects, and provides a fair and efficient system for resolving disputes between developers and homebuyers.