Previously, there has only been a private contract between the consumer and the developer and a complete lack of governance mechanism in the real estate industry. However, now with the Real Estate Regulatory Authority (RERA) Act (2016) passed, the primary aim is to provide greater transparency in the marketing and execution of real estate projects and to attract foreign direct investment into the same, in the short term. The stringent act proposes to protect the buyer by making the seller liable to pay the customer the same interest as demanded of the buyer. Allocated to a bank account, the act ensures developers to park 70% of the project funds instead of investing in multiple projects at a time, thus delivering the flats to the consumers as per timeline and keeping the consumers in the forefront. The act seeks to keep all developers accountable with timely possessions and keeps buyers in the loop with appropriate information on what they are paying for. Additionally, buyers benefit by the regulated broker environment and assure them a 5-year defect liability period.
The current scenario for buyers is undoubtedly favorable and RERA has been touted as a key reform towards greater governance. It was wholly introduced to protect consumers, although one among its several controversial clauses states that if a buyer defaults on an installment, a homebuyer too can be penalized. Under the new draft rules, there is a marked increase in burden on flat purchasers to pay their timely dues, whereas builders after terminating the agreement have full discretion to sell to another buyer immediately, this has only lead to increase in disparity between buyers and sellers. However, experts suggest that such a provision may not be raised against buyers in majority of the cases as largely home buyers would represent as the aggrieved parties who would be moving court for resolution of grievances against such developers. In fact, with the penalty provision in the new act, it’s only trying to achieve a nuanced stance between the rights of both transacting parties, resulting in greater accountability in the sector. Lastly, it’s safe to say that this issue should never crop up should the buyer be genuine.
RERA should eventually decrease the practical problems being faced by real estate consumers now that efforts are being made to increase the access to information. This initiative attempts to draw out a balance and would be an immediate success, once all parties make collaborative efforts in the right direction.