RERA is the 2016 real estate regulatory act. Many states have complied with and implemented the RERA act, and Karnataka is one of them.
RERA was primarily implemented to protect the interests of real estate buyers. Buyers who invest their hard-earned money to purchase low-cost homes are not protected by the law. It is no longer the same since the implementation of RERA.
Bangalore is the third city in the country, after Hyderabad and Chennai, to see an increase in real estate demand. While the rest of the country appears to be taking its time. Following the Covid 19 lockdown, demand for affordable houses in the 80Lacs to 1Cr range has primarily increased.
The age group of people buying real estate in Bangalore has shifted to 34 years of age, from 40+ years previously. In recent years, the implementation of RERA has only increased buyer confidence. RERA has introduced policies and conditions that benefit buyers, which was not previously the case. Previously, there was no proper process in place, and each builder and developer had their own structure and process in place for selling real estate, which favoured builders. This never protected the buyers from the builders' insolvency.
Here are five major advantages of the RERA act that protect buyers' interests and ensures a transparent buying process.
Previously, there was no standard method for calculating an apartment's carpet area. Builders used to inflate carpet area, which drove up property prices. This caused the buyers to pay more than they should have. Builders will be unable to inflate the property value once RERA implements a defined method of calculating carpet area.2. Rate of interest for defaulters, after implementation of RERA
Previously, if the buyer failed to pay the builder for the property, the buyer had to pay a higher interest rate. Similarly, when the builder failed to complete the project on time, they paid the buyers a lower rate of interest in the form of penalties. Prior to the implementation of RERA, there was no transparency or equality, but this is no longer the case.3. Lowers the risk of builder’s insolvency, if the project is under RERA guidelines.
Developers have multiple projects in the works and move funds from one to the other without transparency.
However, following the implementation of RERA, builders must deposit 70% of the realisation in separate banks and can withdraw funds only with the approval of a civil engineer or chartered accountant. This will be done only after the project is completed, lowering the risk for buyers.
If the builder fails to complete the project on time, the buyer's rights are enhanced. Buyers have the option to withdraw from the project and receive a full refund of the amount paid, plus interest.
The buyers can also choose to continue with the project while receiving appropriate compensation for the delay.
Since its inception, RERA has been extremely beneficial to home buyers. RERA has also increased the demand for affordable housing.