The Real Estate (Regulation and Development) Act (RERA) came into force on Monday, bringing one of the country’s most unregulated sectors under regulatory purview. The Act, cleared by Parliament last year, enjoins real estate developers to register with the Real Estate Regulatory Authority in their state before launching or even advertising a project. However, only 13 states have notified rules that will make the act operational, and only one state, Madhya Pradesh, has set up a Real Estate Regulatory Authority. Nine other states have interim authorities in place. The government, however, believes that it is only a matter of time before such authorities are established in other states.
The ways of the real estate business have been loaded against the consumer. Buyers have to submit to one-sided contract terms, cost escalations are frequent and arbitrary, and building plans change according to the whims of developers. A buyer is rarely handed over the property on the date promised by the builder. The new act promises to end such opacity. It requires 70 per cent of the money collected by the developers from buyers to be deposited in a separate bank account to prevent diversion of funds to other projects. Developers and builders will have to submit project details, including approved layout plans, costs and the contract terms with prospective buyers, to the regulator; they will also have to upload these details on a website. Developers will be required to refund payments to buyers within 45 days of the due handover date; failure to do so will attract penalties.
