Benefits First-Time Home Buyers Can Experience With RERA In Action
The Indian government has enforced a set of protocols and procedures for the real estate sector via the RERA, Real Estate (Regulation and Development) Act. Meant to regulate the industry and its norms, the Act has not only identified the concerns of homeowners and buyers when it comes to buying a new property, but also imposed penalties and other measures to tackle them. Buyers and Home Loan borrowers now stand to benefit significantly with the adoption of RERA across states in India.
Some of the areas that RERA addresses are as follows:
- Before the Act came into being, all real estate projects were plagued with the risk of non-completion and delays in possession. This risk was borne by consumers and homebuyers through no fault of their own. RERA however ensures that delays are mitigated by a series of regulations for builders and developers as well as by penalties paid by them in the event of setbacks and deferrals.
- Regulatory authorities before RERA had limited power in the whole process of construction and handover of real estate projects. However, RERA improved and increased the role of official authorities in the process, appointing a regulator in each state and Union Territory with a set of rules to govern the regulator’s functioning.
- Lack of transparency and clarity often made the real estate industry an area of unsure footing for homebuyers. One common occurrence was developers channelling funds from one projects into others, causing delays in the initial plans. Another was changing the plan of construction and development after selling the properties to investors and buyers. To combat both these situations, RERA has made registration of all real estate projects with the regulator mandatory, no matter whether they were residential or commercial. RERA has also enforced developers and promoters to separate accounts for each project, and use funds in each separate account only for that project.
- Developers also often used funds from a project for personal gain or investment in other properties, causing time crunches in completion due to lack of funds. RERA implements the rule of developers depositing 70% of money from investors and buyers of a projects into an account, to be used specifically for the cost of land and construction on that project.
- Duplicitous project developers and scams have been a common occurrence in the industry and to provide a solution to this, RERA asks each builder to submit project plans with details such as completion timeline, revenue and financial plans that have been certified by the right authority, be it an engineer or a chartered accountant.
Benefits of RERA for first-time homebuyers
- Enhanced clarity: RERA puts the spotlight on real estate processes, and significantly improves clarity and transparency between developers and homeowners.
- Increased trust: By increasing the discipline and responsibility of builders, RERA ensures that first-time home buyers know what they are signing up for and can approach the process with more trust than before.
- Boosting the sector leading to lower Home Loan interest rates: With improved trust, more individuals are stepping up to invest in properties. This has contributed to the growth of the real estate sector. Higher demand is slowly leading to a fall in land prices and Home Loan interest rates, which results in lower Home Loan EMIs for new borrowers, benefiting both homebuyers and developers.
With advantages across the board, RERA’s implantation spells good news for first-time home buyers. And if buying a home is on your wish list, this the right time for making an investment. Check your credit score, apply online and submit the required Home Loan documents to get the process started. Pick a lender that Bajaj Finserv who knows and understand the significance of purchasing a home.