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RERA ACT for Developers and Investors

The Real Estate (Regulation and Development) Act, commonly known as RERA, was enacted in 2016 to protect the interests of homebuyers and regulate the real estate sector in India. It aims to ensure transparency, accountability, and fair practices in the real estate industry. Here are some key reasons why RERA exists and its benefits

Safeguarding home buyers' interests

RERA was created to protect homebuyers from dishonest practices by builders and developers. It establishes specific regulations and standards that builders must adhere to, ensuring transparency and fairness in real estate transactions.

Standardisation of carpet area

RERA has introduced a standardised formula for calculating the carpet area of a property. This prevents builders from inflating the carpet area to artificially increase the property cost. Standardisation brings transparency and consistency in the calculation of carpet area.

Same interest rate for default

Under RERA, both the buyer and the builder are required to pay the same rate of interest in case of default. Previously, there was an imbalance in interest rates, with builders paying lower rates for delays and buyers paying higher rates for defaults. RERA ensures equal treatment for both parties.

Reduced risk of bankruptcy for developers

RERA mandates that builders deposit 70% of the project's revenue in a separate bank account. This measure prevents builders from diverting funds from one project to another and reduces the risk of bankruptcy. The funds can only be used for the specific project for which they were raised, ensuring timely completion.

Buyer's rights against false promises

If a builder fails to fulfil their obligations or if there is a discrepancy between the promised and actual project, the buyer has the right to cancel the project and receive a full refund along with interest and compensation.

Right to redressal and grievance resolution

RERA establishes a grievance redressal mechanism through Real Estate Authorities and Appellate Tribunals in each state. Homebuyers can file complaints against builders for any violations or grievances. The authorities have the power to resolve disputes and provide timely justice to aggrieved buyers.

Access to project information

RERA ensures that buyers have access to all project-related information, including design plans, execution strategy, and progress updates. This promotes transparency and empowers buyers to make informed decisions.

Applicability and coverage

RERA applies to all real estate developers and builders, except for certain exemptions like projects with completion certificates before RERA implementation or projects involving a small number of units. It covers both residential and commercial real estate developments.

Overall, RERA plays a crucial role in protecting the rights of homebuyers, promoting transparency and accountability in the real estate sector, and ensuring timely completion of projects.

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