How Does The Real Estate Act Helps Home Buyers?

By: Natasha Mahesh, 2016-05-07 09:00:00.0Category:  Awareness
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The Real Estate (Regulation and Development) Act, 2016, which intends to protect home buyers was passed by Rajya Sabha to bring in transparency and to reduce the flow of unaccounted money into the sector. The bill provides that 70 per cent of the sale proceeds will have to be kept aside by the developer in an escrow. It also wants to protect the rights of home buyers, mandates registration of projects, including those that have not got completion or occupancy certificates.  The following tells you how the Real Estate act protects it’s home buyers.

  1. Provides greater certainty to buyers: The money the buyers pay to the developer will be utilised for development of the project where they have bought houses.

  1. Enable transparency , accountability and timely execution of projects: Promoters will be required to register projects with the regulatory authorities disclosing project information and including details of promoter, project, schedule of implementation , layout plan, land status, status of approvals, agreements along with details of real estate agents, contractors , architects , structural engineers.

  1. Provision for imprisonment: There is imprisonment up to three years for promoters and up to one year for real estate agents and buyers in case of any violation of orders of the appellate tribunals or monetary penalties or both.

  1. No over- the- top ads and offers: Builders will no longer be able to engage in over-the-top advertisements and offers to lure customers.

  1. Necessary clearances required to start the project: Developers will also not be able to start a project without getting the necessary clearances. Failing to deliver on promises may lead to hefty penalties and even imprisonment.

  1. Developers keep 70 percent of collections: The separate account in which developers will have to keep 70 per cent collections from buyers is also a good step. It will help buyers track fund utilisation and dissuade the developer from diverting the money to other projects without buyer’s permission. It will also help the government keep tabs on the use of black money by builders. The law also requires the developer to take permission of at least two-third buyers in case of any defect or change of plans.

  1. Quote rates on carpet area instead of super built-up area: The act will require developers to quote their asking rates on carpet area instead of super built-up area, which has so far been the norm. This aspect will take some time to be fully implemented, as it is a huge change which will require countless developers to recalibrate their rates.

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