Buying a house in Delhi NCR has always been easy but getting the possession in time along with the quality promised by the developers was like pulling teeth until the RERA – The Real Estate (Regulation and Development) Act came into play since May 1, 2017. Impact of RERA can also be seen in the investment part as the year 2017 had received around 11.5 million dollars from abroad for the Indian realty. The amount is as 60 times bigger as compared with what India had received in 2005-2006.
If you too are planning to invest or buy a house in Delhi or NCR, hit the hammer when the rod is red-hot. Since RERA has recently come into implementation, this is the right time when you can take advantage of the new regulation in the capital.
Before its implementation, it had gone through over 20 amendments and brought up with the rules that favour both the buyers as well as the developers in some or the other aspects. Here are few rules under being implemented in Delhi-NCRs –
- Mandatory Registration under RERA
Registration of all the projects as proposed by the builders or promoters is made mandatory. The projects’ size must be more than 500 sq. ft. which was 1000 sq. ft. earlier. Before the RERA implementation in Delhi, most of the projects were not registered by the builders giving opportunities to the fake and unorganized sectors to cheat the buyers and creating black money. Registration was not a statutory obligation earlier. Not merely the registration is made mandatory but the builders are also required to declare the details of the project online on their websites for public viewing.
- Separate Account for Security Deposit
Unlike the early days when the builders had utilized the entire amount received fromt the buyers to establish other projects instead of the promised ones, RERA has asked the builders to keep 70% of the total money received from the buyers to be used in land cost or construction work only. For this, they are required to have a separate account which is termed as ‘Escrow Account.’ The diversion of funds is most likely to get prevented.
- Timely Possession
The chief agenda of the policy was to regulate the delivery system of the real estate in India. The sector had begun to lose the investors due to late, or sometimes, no delivery of the project at all. Even in Delhi, many branded builders are still to deliver their projects that were promised to the buyers. With RERA in action, builders who fail to give the possession on the promised time will have to pay 10% of the total value of the project in form of penalty. Imprisonment for three years, or extended to up to 7 years, now is yet another punishment for the defaulters.
4.Carpet Area Only
In the real estate sector, size of the property is a matter of great concern. A difference of even a hundred sq. ft. can bring the difference of lakhs in the value. This area precision is specifically given a focus in RERA as there is a difference of around 300-500 sq. ft. between the super built-up area and the carpet area. If the carpet area is around 1200 sq. ft., super built-up area can be 1500 or 1600 sq. ft. depending upon the construction. Which means the extra 300-400 sq. ft. of area is the outside part of the construction and is not of use. Very cleverly the builders used to plan the cost of the project considering the super built-up area and not the carpet area.
RERA has now declared that the cost of the property will be evaluated on the basis of carpet area and not the super built-up area.
The foremost objective of the Act is to gain the trust of the investors in Indian as well as abroad. Keeping everything transparent and open to the public can help the real estate sector achieve their goal. Right from registering the property to the cost and date of possession promised to the buyers, the rate of interest in case of default, post-possession services for the next 5 years and other major and minor segments are worked upon to keep the transparency with the public. Registration details are also made public on the RERA website so that innocent buyers can be aware of the builders that are not listed under RERA.