What Homebuyers and Sellers Should Know in Major Indian Cities

The Real Estate (Regulation and Development) Act, commonly known as RERA, serves as a pivotal regulatory framework for the real estate industry across India, including major metro cities like Mumbai and Bangalore. Since its implementation in May 2017, RERA has brought about significant changes in how real estate transactions are conducted, aiming to protect homebuyers and promote transparency in the property market.

RERA Registration: A Mandatory Compliance

One of the cornerstone requirements under RERA is the mandatory registration of all residential and commercial projects with the regulatory authority. This applies to developers undertaking projects on land exceeding 500 square meters or those offering more than eight units. The registration is a crucial step, as it ensures that the project details are made public and accessible to potential buyers through the official RERA website. This transparency allows buyers in cities like Bangalore and Hyderabad to make informed decisions by reviewing the project’s compliance with legal norms before investing.

Standardized Calculation of Carpet Area

RERA has standardized the method of calculating the carpet area, which is critical for buyers to understand what they are paying for. The carpet area is defined as the net usable floor area within the apartment, excluding external walls, service shafts, balconies, verandas, and terraces. This clarity prevents developers from inflating property prices by including non-usable areas in the calculation. In cities like Chennai and Pune, where real estate costs are significant, this regulation ensures that buyers get what they pay for, enhancing trust in the market.

Ensuring Timely Delivery and Regular Updates

One of the significant benefits of RERA is its emphasis on the timely delivery of projects. Builders are required to adhere to the construction timelines agreed upon with buyers. In case of delays, they are obligated to either refund the amount paid by the buyer or pay interest for each month until possession is granted. Additionally, developers must provide quarterly updates on the project's status, including the number of units sold and the progress of construction. This requirement is particularly beneficial in rapidly growing cities like Bangalore and Noida, where the demand for housing is high, and delays can lead to financial strain for buyers.

Standardized Agreements: Protecting Buyer Interests

RERA mandates that all sale agreements between builders and buyers follow a standardized format. This prevents the inclusion of clauses that disproportionately favor the builder, ensuring a fair contract. Builders are allowed to make alterations only if they are in line with the disclosures made at the time of registration. This provision is crucial for buyers in cities like Mumbai and Bangalore, where the high demand for properties often leads to rushed decisions without thorough contract review.

Regulation of Advance Payments

Another significant aspect of RERA is the regulation of advance payments. Builders are prohibited from demanding more than 10% of the property's cost as an advance payment before entering into a written agreement with the buyer. This regulation is particularly important in metro cities like Delhi and Bangalore, where real estate prices are steep, and large upfront payments can be financially burdensome for buyers.

Grievance Redressal: A Framework for Buyer Protection

RERA also provides a robust grievance redressal mechanism for buyers. If a buyer identifies any structural defect in the property within five years of possession, the builder is obligated to rectify the defect within 30 days or compensate the buyer. Complaints must be lodged in writing with the RERA authority, which is required to resolve the issue within 60 days. This provision empowers buyers in cities like Mumbai and Kolkata, where property disputes have historically been challenging to resolve.

These RERA guidelines are essential for anyone involved in the real estate market, whether buying or selling property in major metro cities. They not only ensure a level playing field but also foster a transparent and trustworthy environment, crucial for the sustainable growth of the real estate sector in India.