Introduction to Property Buying

What is the RERA Act? How is it relevant with investing into property and home loans?

What is the RERA Act? How is it relevant with investing into property and home loans?

The RERA Act 2016, also known as the Real Estate (Regulation and Development) Act, has proven itself to be a boon for homebuyers. This act wonderfully helps protect any potential home purchasers and at the same time encourages investments in real estates.

Listed below are some of the basic features of the act:

  • The act is applicable in every state and UT in Indian except Jammu and Kashmir.
  • All Projects (residential / commercial) with area greater than 500 sq.mts. or with more than 8 proposed units to be constructed in the project are covered under this act.

Here are a few reasons as to why the RERA Act, 2016, is relevant when one talks about investing in property and home loans.

  • Under the RERA Act, 2019, it has been established that at the very least 70% of the investor’s/buyer’s money would be kept in a separate account. Post this; the money may be allocated to a builder for only construction purposes and other costs ranging around it. This ensures that the money collected is used in the project, hence ensuring financial viability leading to completion.
  • Another great security aspect of the Act is that a builder cannot ask for more than 10% of the property’s actual cost as an advance prior to the signing of the agreement.
  • The money withdrawn from the said account will always be certified from an architect, engineer and CA.
  • This money being withdrawn should always be in sync and proportion with the percentage of progress of the project being invested in.
  • A developer cannot put his project on the market without registering it with the authority.
  • Throughout each and every stage of the project, registration needs to be carried out for them, separately.
  • Apart from the developers, real estate agents should be registered with the authority in order to play a part in selling the projects.
  • If, post the allotment of a project to home buyers and investors, the builder/developer wants changes to be made to the building plans, then they would have to seek the agreement of 2/3rd of the allottee.
  • Every developer needs to take out insurance for the building of the project and the premium for the same needs to be paid before transferring the properties(s) to the allottee.
  • Any failure on the part of the developer to meet any of these rules according to the RERA Act 2019, could involve penalties and imprisonment as well.

The RERA Act 2019 thus helps home buyers invest in properties and take out home loans without having to worry much about the safety aspect of it. Buyers can even opt for fast home loan processing in such cases.

There are 30 states and Union Territories (UT) which have notified the rules under the RERA Act. Out of this, 29 states/UTs have set up a Real Estate Regulatory Authority and24 states/UTs have operationalised their websites under the provisions of RERA. Below is a list of all the states/UTs which have implemented the Act: