What is the Real Estate Regulation Act (RERA)? Here is how it will help buyers
Real Estate Sector (broadly) or Real Estate Developers in Goa (in particular) finally got its first regulator from Monday, May 1, 2017 after The Real Estate (Regulation and Development) Act, 2016 (RERA) got notified.
What is RERA? What is the Real Estate Regulation Act (RERA)?
RERA seeks to bring clarity and fair practices that would protect the interests of real estate buyers in Goa and also impose penalties on errant builders in goa.
So what is RERA? Here is a look at the real estate regulator and how it will impact the real estate developers in goa.
According to RERA, each state and Union territory will have its own regulator and set of rules to govern the functioning of the regulator. Center has drafted the rules for Union territories including the national Capital. While many states are still behind on schedule for notification of RERA rules, many have notified rules and a regulator will start functioning. Some of these states are Haryana, Uttar Pradesh and Maharashtra. Goa has decided to implement RERA with in next 3 months time i,e; by 1st August 2017 it will come in to effect.
Current status of real estate developers in goa is very encouraging. There is a viscous cycle in play – slump in real estate market in past three years -> piled up inventory -> more holding cost and hence more ticker price -> costly property for buyers ( a deterrent to buy ). RERA may add up more cost to the exiting high cost inventory due to regulatory requirement fulfillment which negatively impact real estate sector in goa in short-term.
Lets analyse what is RERA and its impact on real estate developers in goa.
RERA seeks to address issues like delays, price, quality of construction, title and other changes.
Delays in projects are the biggest issue faced by buyers. The reasons are many and the impact is huge. Since the last 10 years, many projects have seen delays of up to 7 years. Projects launched after the turn of this decade have faced delays as well. Some have run into obstacles even before a brick was laid. The reasons include diversion of funds to other projects, changes in regulations by authorities, the environment ministry, national green tribunal etc and other bodies like those involved in infrastructure development and governing transport. In many places, land acquisition becomes an issue. Errant builders often sell projects to investors without the approval of plans, unauthorized increase in FAR, bad quality of construction, projects stuck in litigation etc.
Key provisions of RERA
The Real Estate Act 2017 has several significant provisions for the benefit of buyers and ensuring transparency in the sector. Some of these important provisions are:
- Deposits: Builders are required to deposit 70 per cent of the funds collected from buyers in a separate bank account in case of new projects and 70 per cent of unused funds in case of ongoing projects.
- Mandatory registration: All projects with plot size of minimum 500 sq.mt or eight apartments need to be registered with Regulatory Authorities.
- Penal interests in case of delay: Both developers and buyers have to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays.
- Liability: Liability of developers for structural defects for five years.
- Punishment: Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.
It will be the responsibility of each state regulator to register real estate projects and real estate agents operating in their state under RERA. The details of all registered projects will be put up on a website for public access.
RERA talks about the quality of construction in projects. Over the last few years, buyers have protested about poor of flats. The regulator will ensure protection to buyers in this matter for five years from the date of possession. If any issue is highlighted by buyers in front of the regulator in this period including in quality of construction and the provision of services, the developer will have to rectify the same in a matter of 30 days.
Developers can’t invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority. Furthermore, after registration, all the advertisement inviting investment will have to bear the unique RERA registration number. The registration no. will be provided project-wise.
After registering the project, developers will have to furnish details of their financial statements, legal title deed and supporting documents.
If the promoter defaults on delivery within the agreed deadline, they will be required to return the entire money invested by the buyers along with the pre agreed interest rate mentioned in the contract based on the model contract given by RERA.
If the buyer chooses not to take the money back, the builder will have to pay monthly interest on each delay month to the buyer till they get delivery.
After developers register with the regulator, a page will be created for the builder on the regulatory authority’s website. The developer will be given login credentials using which it will upload all the information regarding the registered projects on the regulator’s website. The number, type of apartments, plots and projects and their completion status will be updated at a maximum quarterly basis.
To add further security to buyers, RERA mandates that developers can’t ask more than 10 per cent of the property’s cost as an advanced payment booking amount before actually signing a registered sale agreement.
The regulator will have the power to fine and imprison errant builders based on a case by case basis. The imprisonment can go up to a period of three years for a project.
After getting answers to primary questions like What is RERA? What is the Real Estate Regulation Act (RERA) or its impact on Real Estate Developers in Goa, next obvious question is :
How should builders in goa, real estate developers in goa react?
What should or what must they do?
The answer has two parts :
On long term basis – they have no option but to full fill all the conditions stipulated in RERA and function accordingly.
Immediate short term strategy till 31st July ( before ACT gets notified in Goa ) – developers with costly unsold inventory must aggressively market thru all channels including Digital Marketing For Real Estate Developers in Goa.
– Offer FREEBIES
– Slash ticket prices
Why it is important? Because , real estate developers in goa will not to be able market UNREGISTERED projects.
So if you are a real estate developer in goa, builder in goa, real estate agent in goa – contact us. We at KICKASS DIGITAL MARKETING can help you device most cost effective, creative digital marketing strategy for real estate developers in goa.
What RERA means for real estate agents in goa, under-construction projects
Under the RERA Act, in order to render their services, all real estate agents in goa have to be registered with the authority and the developer
Registration of real estate agents in goa
Under the Act, in order to render their services, all real estate agents in goa have to be registered with the authority and the developer. While registering their projects, the developers are also liable under the Act to disclose the name and other details of the authorized agents who are allowed to deal in particular projects of the developer. The real estate agent will be provided with a registration number by the regulator, which they have to mention in each sale they make.
The real estate agents in goa are required to maintain books of account, records and documents related to every transaction done by them. They are also to restrain from making any false representation—whether written, orally or by visual representation. Also, agents are required to share all the information and documents about the project with the buyers, which they are entitled to at the time of booking a property.
Once a regulator is in place, and agents get registered, it would become difficult for the real estate agents in goa to mislead the home buyers. Sometimes, in order to convince home buyers to buy a property, agents may manipulate information. For instance, they may say that very few units of a project are left for sale, or that the developer would raise the price in a few days; to pressurize the buyer into making a decision in a hurry. Pushed into rushing, some buyers could forego basic due diligence on their part. However, once the regulator is in place, home buyers will be able to cross-check most of this information on the regulator’s website.
The Act also provides for penalties and imprisonment for agents who violate any of its rules and regulation. For instance, real estate agents will have to pay a fine of Rs 10,000 for violating any provisions of the Act, for each day the violation continues; or face imprisonment of up to 1 year.
The regulator will also maintain a list of the authorized agents on its website, along with details of projects that they can deal in. Agents who are found to be in violation of the rules, will get removed from this list.