Page 47 - Banking Finance November 2017

ARTICLE

each of their projects. A minimum 70 per cent of the money bodies and appellate tribunals have to be set up in each
from investors and buyers will have to be deposited. state to solve builder buyer disputes within 120 days. Be-
sides, promoters will not be able to change a project's de-
This money can only be used for the construction of the sign without buyer's consent. Promoters must have the con-
project and the cost borne towards the land. In case of delay sent of two-thirds of the buyers in a project before making
of project the developers need to pay an interest rate of 2 any change in the number of units or other structural
percentage points above State Bank Of India's lending rate changes.
to home buyers. RERA also prescribe imprisonment of upto
three years for errant developers. Challenges

There is no denying fact that RERA is a blessing for the
Builders can't charge for area outside the wall: Till now,
homebuyers. Focusing on the grey areas, which were per-
the industry has been selling real estate based on super built
sistent in the sector and were responsible for property buy-
up area. Now RERA stipulates projects to be sold on carper
area. As per the market trend, carpet area of a project is ers getting duped, the Act contains key reformative mea-
sures to safeguard the interest of homebuyers. However,
generally 30% to 35% lesser than the super built area of the
implementing this on ground level is challenging.
project. Now the builder can't charge for the super built-
up area.
Foremost challenge faced by RERA is its acceptance among
Improvement in quality of construction: RERA talks about the developer community. They have, time and again, ex-
the quality of construction in projects. Over the last few pressed fear that RERA can over-regulate the sector, thus
years, buyers have protested about poor quality of construc- resulting in its eventual strangulation. Also, apparently RERA
tion. The regulator will ensure protection to buyers in this wants them to follow strict timelines but their time gets lost
matter for five years from the date of possession. in following up with government agencies for the various
approvals.
If any issue highlighted by buyers in front of the regulator in
this period including in quality of construction and the pro- Other challenge for RERA is its notification by the respec-
vision of services, the developer will have to rectify the same tive state government and implementing the same in true
in a matter of 30 days. This provision of the act will improve spirit. Developers may influence the state government and
the quality of the construction. get the provisions of RERA modified in their favor.The
Maharashtra government notified the draft RERA rules in
Transparency in deals: Developers can't invite, advertise, December 2016 and since then, it has been criticized by the
sell, offer, market or book any plot, apartment, house, build- activists for being too developer friendly.
ing, investment in projects, without first registering it with
the regulatory authority. Furthermore, after registration, all Conclusion
the advertisement inviting investment will have to bear the
RERA is a full-proof scheme to re-build trust, bring in trans-
unique RERA registration number. The registration number
will be provided project wise. After registering the project, parency and safeguard the consumers' interest.The intent
of RERA is loud and clear satisfaction of home buyers and
developers will have to furnish details of their financial state-
providing them the value for their money.
ment, legal title deed and supporting documents.

To add further security to buyers, RERA mandates, that RERA Act will ensure that the homebuyers are adequately
developers can't ask more than 10 per cent of the property's protected and the promoters and developers abide by the
cost as an advanced payment booking amount before actu- rules and regulation. It will also try to protect the interest
ally singing a registered sale deed. of the homebuyers ensuring speedy redressal of dispute
which will help gain confidence amongst the buyers. So in
Quick redressal of grievances: Under RERA, regulatory true sense RERA is boon for the homebuyers. T

BANKING FINANCE | NOVEMBER | 2017 | 47

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