Oct 2017
Pros and Cons of RERA Update

The Real Estate Regulatory Authority Bill was recently approved by the Union Cabinet. While it might be beneficial for some, it has its own hurdles as well. Have a look at 5 pros & cons of the RERA Act.

  • Pros:
  1. Transparency: Promoters must provide accurate disclosures on the website along with the allotment letter.
  2. Compulsory registration: Builder must register with the housing regulatory projects and submit all the details of the property.
  3. No misleading claims:  A written affidavit should be given mentioning the time frame of the project to be delivered.
  4. Money management: Builders have to deposit 70% of the buyer's amount in an escrow A/c to avoid diversion of money.
  5. Warranty: RERA will provide 5-year warranty for structural defects.
  • Cons:
  1. Hike in property prices: Due to the lack of liquidity, builders have to look for other sources for money thus, leading to rise in the price of the property.

  2. Stagnant growth: Due to 70% investment in escrow account there will be cash flow hindrances leading to delay in projects.

  3. Supply-demand imbalance: Compliance to all the aspects will delay the project and as there won't be pre-selling of the property.

  4. Harsh penalty: If a builder fails to fulfill any provisions, he will be liable for imprisonment up to 3 years or 10% of the total cost of the project.

  5. No cover on rental: RERA doesn't include any rental agreements and arrangements of any sorts.

Updated: 10/18/2017 3:06:56 PM

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