In the realm of Indian real estate, a lot of challenges were there for both builders and homebuyers for years. However, with the implementation of the Real Estate (Regulation and Development) Act (RERA), significant changes have been ushered in.
Aiming to address longstanding issues and bring transparency and accountability to the sector. This article we will discuss seven problems that have historically afflicted the Indian real estate market before RERA implementation. Also discuss how RERA has sought to mitigate these challenges for the benefit of both builders and property buyers.
7 problems in Indian real estate:
- Before RERA, builders would start selling their projects without permissions. Now, under Section 3 of RERA, builders need a project RERA registration number before they start sales.
- Builders used to quote prices on the super built-up area. Now, RERA has made it compulsory for builders to quote prices on the RERA carpet area.
- Unequal penalty clause in the agreements meant that if the home buyer delayed payments, they would end up paying a higher percentage of penalty. Whereas if the builder delayed possession, they would end up paying a much lesser penalty back to the home buyer.
- Misleading and false advertisements. Now, under Section 12, builders cannot do that. If they're showing, for example, a swimming pool in the brochures, they have to deliver the swimming pool in the project.
- Diversion of funds from one project to the other. Now, under Section 4 of RERA, builders have to deposit 70% of the funds in a separate bank account, and these funds are supposed to be used for construction and other project-related expenses.
- No structural defect or workmanship warranty. Section 14 of RERA provides a 5-year warranty for the same.
- Delayed possession. This problem is common even after RERA.
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