Real Estate Sector Regulation Law (RERA ACT) and Changes in PMAY (Important) (Download PDF)

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Real Estate act is believed to be a pioneering legislation with long-term transformative effects ensuring real estate sector is properly governed and buyers are empowered. RERA Act is considered as one of the landmark legislations passed by the Indian Parliament.

Image of Real Estate Sector Regulation Law

Image of Real Estate Sector Regulation Law

Image of Real Estate Sector Regulation Law

Real Estate Sector Regulation Law- 2017

  • Addresses grievances of buyers bringing transparency and accountability in real estate sector. Following are important aspects.

  • Developer cannot make any changes to the plan without the written consent of the buyer. This provision will not allow the developer to increase the cost of their projects.

  • Ensure realty project is completed in time- If delayed, then developer pays interest on the amount paid by the buyer.

  • Registration is mandatory for all commercial and residential real estate projects where the land is over 500 square meters or includes eight apartments, which are under-construction.

  • Every phase of apartment will be considered a standalone real estate project, and separate registration needs to be obtained for each project.

  • Compulsory for a state to establish a State Real Estate Regulatory Authority as per the new act. Buyers could approach this body for redressal of their grievances.

  • Property will have to be sold to buyers based on carpet area and not on super built-up area, which will become illegal under the new law.

  • Failing to register a property attracts a penalty up to 10 % of the project cost and a repeated violation could send the developer in jail.

  • Developer has to place 70 % of the money collected from a buyer in a separate escrow account to meet the construction cost of the project keeping a check on developers who divert the money to start a new project, instead of finishing the one for which money was collected ensuring that the respective project is completed in time.

  • When buyer finds any shortcomings in the project then they can contact the developer in writing within one year of taking possession.

  • Law provides a maximum jail term of three years with or without a fine, for a developer who violates the order of the appellate tribunal of the RERA.

Importance of Housing and RERA

  • Housing plays a catalytic role in fulfilling the demand for housing and infrastructure in the country

  • Housing is second largest sector after agriculture providing employment to 6.86%

  • Housing market is largely been unregulated, with absence of professionalism and standardization, and lack of adequate consumer protection.

  • In absence of RERA consumers suffered due to:

    • Delay in project completion

    • Diversion of funds collected from buyers

    • One-sided contracts in the absence of adequate supply

    • Reneging on contractual commitments by both the developers and the buyers

    • Constraints in financing and investment options available to the sector

Pradhan Mantri Awas Yojana- PMAY Addressing Hosing Shortates

  • Technical study conducted in 2011 placed the housing shortage at 18.76 million in urban areas, of which 96 % is in the EWS segment and in LIG Housing

  • Now it is believed that the shortage is likely to be around or in excess of 10 million units which is aimed to be addressed through ‘PMAY’ Urban, of the Government of India.

  • Mission aims to make available housing for the Economically Weaker Sections (EWS), Lower Income Groups (LIG), and the MIG (Middle Income Group), through Government land and various PPP Models encouraging housing through private partnership.

  • Government makes available the land and provides a subsidy to each allottee and assist in obtaining easy financing from banks for the remaining sum required.

  • House is in the name of the woman individually or co-jointly with the male member of the family to help gender empowerment.

  • House must have kitchen and a toilet to foster security of the girl child

- Published/Last Modified on: November 18, 2017

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