"Real Estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full and managed with reasonable care, it is about the safest investment in the World."
The Real Estate Regulation and Development Act, 2016, or RERA had come into effect on May 1st 2017. RERA aims to punish unscrupulous builders and help ordinary citizens like you and me, get that dream home.
Buying an under construction apartment, helps you get a dream home at a lower price than a ready-to-move apartment. But there's a big problem...The builder has promised to give possession of the apartment in 2 years. What if he doesn't keep his word? You could lose tax benefits if you have availed a home loan....Worse, if he runs away leaving a half constructed apartment, you will be paying home loan EMI's for an apartment you will never see.
Your family, friends and relatives say, never go for an under construction apartment....It's cheap, so what? Better buy a ready-to-move apartment and enjoy a tension free life.
Should you book an under construction apartment, hoping RERA will protect you? Let's find out. Want to know more on real estate? We atIndianMoney.com website. IndianMoney.com offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real Estate, Loans, Bank Accounts and capital markets
Young citizens like you and me love under construction apartments. Under construction apartments give you bargaining power.....You can negotiate with the builder for a nice cheap apartment. Your builder is busy constructing the apartment and the locality around this apartment also develops with time. A few years later your apartment is ready and you take possession of it in a posh locality.
You also take risks when you book an under construction apartment. What if this building never comes up? The builder rewards you with a lower price for taking this risk. Let's not beat around the bush. You love under construction apartments because you cannot afford the costly ready-to-move apartments.
SEE ALSO: Aadhaar Card Check Online
Should You Buy Under Construction Property In RERA Regime?
1. Stick to builders with good track records
RERA says its compulsory for a builder to register his project with the real estate regulatory authority and mention the names/details of authorized agents who deal with that project. But, if a builder has not yet registered his ongoing projects, he can do so within 31st July 2017.
You must buy under construction apartments only from builders with a good reputation and established projects. Check and see if the builder is pursuing registration of his projects under RERA. You can find this from the developers website. Only builders who are financially strong will be able to register their projects with RERA.
2. RERA could improve chances of getting possession of apartments
RERA says the builder has to transfer 70% of the money received from you and other home buyers in an escrow account. This money would be withdrawn as the stages of construction are approved by the engineers and CA's of builders. This is a great move which ensures the builder is actually constructing your apartment with the money you give him.
If the builder delays possession of your apartment, you can approach the appellate tribunal and look at legal options. RERA says, if the builder delays possession of the apartment within the agreed time period, he would have to return the whole amount with interest, as mentioned in the sale agreement.Can RERA punish builders who have willfully defaulted on projects in the past? This needs to be seen.
But there are some problems.....
1. RERA could hamper projects of builders
RERA says...Unless a builder registers his project with the real estate regulatory authority and the real estate broker registers and gets his registration number, the projects cannot be advertised, marketed or sold.
The builder would have to wait till he gets the necessary approvals and he cannot collect money from you and other customers. This will affect his projects as he won't have capital to run the project.
2. States could interfere with RERA
RERA is a Central Act. Land is a State Subject. You know about the nexus between State politicians and builders. Would State Governments protect your interests or the interest of builders?
Powerful state politicians can easily ensure that ongoing projects of builders do not come under RERA. If you are a buyer currently facing problems with your builder, RERA might not be of much use to you.
Remember, No regulator becomes effective from DAY 1. It would be a while before RERA becomes strong enough to take on the powerful builder. Whether RERA acts in your interest or the builders interest needs to be seen. Finally, RERA has to be strong enough to take on powerful state governments. Be Wise, Get Rich.
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