RERA or Real Estate Regulation Act is Parliament’s Act enforced in 2016 for protecting the interests of buyers and encouraging investments in real estate. After the bill was passed in Rajya Sabha on 10th Mar, 2016 and in Lok Sabha on 15th Mar, 2016 it was enforced in totality on 1st May, 2017.
Under RERA Act, all commercial and residential projects over 500 sq. m., or eight apartments must compulsorily be registered with RERA to be validated. Without this authentication from RERA no project is treated valid. New projects must seek approval before it is launched. This is in view of complaints received from buyers who feel cheated after learning that their projects have not yet been approved even when the project is near completion.
For any structural changes that a developer wants to make, consent of 2/3rd of the buyers must be taken. Without such consent no structural changes would be entertained. A developer could be penalized including imprisonment of 3 years for project delays or arbitrary structural changes. In events of delays in possession, a developer must pay the buyer an interest of 2% above current lending rates.
In accordance to RERA Act, a developer needs to deposit 70 percent of the funds collected from buyers in bank accounts created specifically for a real estate project. Builders could only quote prices based on carpet area and not on super built-up area as earlier. defaulters could be imprisoned up to three years.