The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, marks a significant milestone in the evolution of India's real estate sector. Enacted with the aim of enhancing transparency, efficiency, and consumer protection, RERA has transformed the landscape of real estate transactions in India. Since its full implementation in May 2017, the act has instilled a greater sense of accountability among developers, ensured more transparent dealings, and safeguarded consumer interests like never before.

A Leap Towards Transparency and Accountability

Passed by the Rajya Sabha on March 10, 2016, and by the Lok Sabha on March 15, 2016, RERA received the President's assent on March 25, 2016, setting the stage for its implementation. The primary objective of RERA is to promote transparency, accountability, and efficiency in the real estate sector, thereby protecting the interests of homebuyers.

Under RERA, any development of buildings, plots, apartments, or conversion of existing buildings into apartments, or selling part of a development, falls under the ambit of the act. There are, however, exemptions for projects developed on land less than 500 square meters or comprising fewer than 8 apartments in all phases, among a few others.

Key Provisions Under RERA

RERA introduces several groundbreaking provisions aimed at safeguarding buyers and ensuring fair play in real estate transactions:

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  Disclosure of Project Details: Promoters are now required to disclose comprehensive details about their projects, including carpet area, approvals, and the timeline for completion, before selling.
  


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  Escrow Account for Funds: A significant reform is the mandate for promoters to deposit 70% of the funds collected from homebuyers into an escrow account. Withdrawals from this account are tightly regulated, requiring certification by architects, engineers, and chartered accountants, ensuring that funds are used primarily for construction purposes.
  


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  Structural Defects Liability: Promoters are held accountable for any structural defects in the project for five years from the date of possession, offering buyers much-needed assurance about the quality of construction.
  


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  Equal Interest Rates for Buyers and Promoters: In cases of delays, the rate of interest to be paid by the buyer or the promoter is the same, ensuring fairness irrespective of the defaulting party.
  


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  Construction-linked Payment Plan: Payments by homebuyers are directly linked to construction progress, protecting their investments and aligning payment schedules with actual work completion.
  


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  Consent for Plan Modifications: For any changes to sanctioned plans, promoters must obtain written consent from at least two-thirds of the allottees, safeguarding the interests of buyers.
  


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  Maintenance Responsibility: Until the formation of an association of allottees, the promoter is responsible for the maintenance of the project, ensuring proper upkeep during the interim period.
  


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  Dispute Resolution Mechanism: The agreement to sell must specify a mechanism for dispute resolution, as provided by RERA, facilitating quicker resolution of conflicts.
  

The Impact of RERA

RERA has ushered in a new era of buyer empowerment in India's real estate sector. By mandating stringent compliance and transparency norms, the act has restored confidence among homebuyers, encouraging a more informed and cautious approach to property investments. Developers, on the other hand, are adapting to the new regulatory environment by focusing on timely project delivery and enhanced quality standards.

As the real estate sector continues to evolve under RERA's watchful eye, the future looks promising for both developers and buyers. With its consumer-centric approach, RERA not only aims to protect buyers but also to foster a healthier, more reliable real estate market in India.