RERA Approved Projects: Importance, Benefits & Approval Criteria
Introduction
Imagine a real estate market where transparency reigns supreme, buyer interests are safeguarded, and every transaction unfolds with clarity and trust. This vision is not a distant dream but a reality fostered by RERA-approved projects in India. Dive into our exploration of why RERA approval isn’t just beneficial—it’s essential for anyone navigating the realm of property transactions.
What Is RERA?
The Real Estate (Regulation and Development) Act, or RERA, was enacted by the Indian government in 2016 to regulate the real estate sector and protect homebuyers. It mandates that all real estate projects must be registered with the Real Estate Regulatory Authority, ensuring transparency through detailed disclosures about project plans, timelines, and financial aspects. Builders must deposit 70% of project funds in a separate escrow account to prevent misuse and guarantee project completion.
RERA also aims to safeguard buyer interests by prohibiting changes to project plans without majority consent from buyers and requiring timely project delivery. Additionally, it provides a fast-track dispute resolution mechanism and imposes penalties for non-compliance, enhancing accountability and professionalism in the real estate sector.
Is RERA Approval Necessary?
Yes, RERA approval is necessary for all real estate projects that meet certain criteria under the Real Estate (Regulation and Development) Act, 2016. Here are some key points to why you should have RERA approval.
- Legal Authorization: RERA approval allows developers to legally advertise, market, book, sell, or invite people to purchase properties.
- Buyer Protection: RERA clearance safeguards buyers from unscrupulous developers and ensures projects meet stringent quality standards.
- Transparency: RERA-registered projects enhance transparency between buyers and sellers, simplifying the process of buying and selling properties.
What Are All The Benefits I Get With RERA Approval?
Registration
All real estate projects (except for small projects) must be registered with the Real Estate Regulatory Authority (RERA) before they can be marketed or sold. This includes providing detailed information about the project, including the layout, timeline for completion, and financial details.
Transparency
Builders are required to provide all necessary project details, such as project layout, government approvals, and the status of land titles. This information must be updated regularly on the RERA website.
Protection of Buyers
The act mandates that builders can only make changes to the project plans with the consent of two-thirds of the buyers. Additionally, it stipulates that builders must deliver projects on time and adhere to the agreed terms. If there is a delay, builders are required to compensate buyers.
Escrow Account
Developers must deposit 70% of the project funds into a separate escrow account to ensure that the money is used only for the project’s construction and not diverted to other projects.
Fast Track Dispute Resolution
RERA provides a mechanism for quick resolution of disputes between buyers and builders through the establishment of a Real Estate Regulatory Authority and an Appellate Tribunal.
Penalty for Non-compliance
The act penalises builders, real estate agents, and other stakeholders for non-compliance with its provisions, including imprisonment for serious offences.
Are There Any Criteria To Get RERA Approval?
For people who are about to sell their land, it is mandatory to have RERA approval. However, most don’t have it as they are unaware of the criteria they need to meet to get RERA approval. Here are the key criteria that are required to get RERA approval for land.
- Project Size: Projects with a certain number of units or land area thresholds must be registered with the respective state’s Real Estate Regulatory Authority (RERA).
- Detailed Project Information: Developers are required to provide comprehensive details about the project, including layout plans, timelines for completion, financial details, and legal approvals.
- Escrow Account: Developers must open a separate escrow account and deposit at least 70% of the funds received from buyers into this account. This ensures that the funds are used solely for the construction and development of the registered project.
- Legal Compliance: The project must have obtained all necessary approvals and clearances from local authorities and comply with all applicable laws and regulations.
- Builder Background: Developers must disclose their track record of past projects, financial stability, and any litigation history.
- Project Timeline and Quality Assurance: Developers must commit to completing the project within the agreed timelines and adhere to prescribed quality standards.
- Buyer Consent: Any changes to the project plans or specifications must have the consent of at least two-thirds of the buyers who have invested in the project.
Why One Should Not Buy Or Sell Land Without RERA Approval?
Legality and Penalties
- Mandatory Registration: RERA registration is mandatory for real estate projects exceeding specific thresholds (land area over 500 sq.m or more than 8 apartments).
- Prohibition and Penalties: It is illegal to sell or purchase property in an unregistered project under the RERA Act. Developers can face penalties of up to 50% of the project cost or imprisonment for non-compliance. Unregistered real estate agents may be fined up to ₹10,000 per day for selling properties in unapproved projects.
Buyer Risks
- Transparency Concerns: Purchasing property in a non-RERA registered project can lead to uncertainties regarding project details, timelines, and legal approvals.
- Loan Difficulties: Buyers may face challenges in securing loans from financial institutions due to a lack of RERA compliance.
- Dispute Risks: There is a higher risk of disputes with developers over promised amenities and timely project delivery.
- Lower Resale Value: Properties in non-RERA registered projects may have lower market value and face challenges in resale.
Developer Obligations
- Comprehensive Disclosure: RERA-registered developers are required to provide complete project information on the RERA website, ensuring transparency for potential buyers.
- Escrow Requirement: Developers must deposit 70% of project receivables into a separate escrow account, ensuring funds are used exclusively for timely construction and reducing financial risks for buyers.
- Buyer Compensation: Developers are obligated to compensate buyers for any delays in project completion, promoting accountability and buyer satisfaction.
Conclusion
RERA approval safeguards both the buyers and developers in the Indian real estate market. It ensures transparency, accountability, and adherence to legal standards, making property transactions more secure and trustworthy. Whether you’re a buyer seeking a secure investment or a developer committed to delivering quality projects, RERA approval is an essential aspect to consider. Prioritize RERA-registered projects cause you not only protect your interests but also contribute to a more transparent and regulated real estate environment.