Impact of the Real Estate (Regulation and Development) Act 2016

Prior to its enactment, real estate developers did not have any authority examining and supervising them on their development work. The Impact of RERA can be defined in the following manner:

1. Timely Completion of Project: The developers are required to pay the buyers’ interest on the amount paid them if possession of the property is not handed over to them in the period as reported by the developer to the RERA Authorities.
   
   
2. No Embezzlement of Funds by Developer: The developers are required to open a special escrow account and deposit a minimum of 70% of the funds received from the buyers. The developer cannot withdraw money from the account without certification from the appointed chartered accountant and designated architect stating that the funds are required for the real estate project.
   
   
3. Transparency: The developers are required to show complete details of the project on the website clearly stating all the basic details of the project and its progress.
   
   
4. Indemnification against defects: The developers are required to fix defects detected in the property within five years of handing over possession of the property to the buyer.
   
   
5. Price: The price of a commodity is dependent on supply and demand. The price of the real estate market is initially increased as supply of the property is limited due to stringent laws and compliance. On other hand, demand will increase as it leads towards a consumer-friendly market.

RERA has improved the functioning of the Real Estate sector by changing it from a developer-favouring sector to a more consumer-friendly one.

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