Buying a home for most people is a once-in-a-lifetime event and there is a great deal of time, effort and money involved in the process. When many years ago, buying an apartment or villa that was under construction was a risky choice to make, today RERA (Real Estate Regulation and Development Act)has revolutionised the real estate industry and made it a fertile ground for new buyers to venture into deals even while their dream apartment or villa is under construction. Let us see how this change has come about and transformed the norms in the real estate industry that existed in the pre-RERA period. Real estate challenges faced before RERA
1. Delay in handing over
Long term delays in handing over units that extended from 3 to 5 years, completely contrary to what was written in the sale agreement, was a common difficulty faced by buyers of apartments and villas.
2. Absconding builders
There were many cases where builders went absconding after collecting substantial deposits and funds from home buyers, while the apartment or villa was under construction. There were even builders who abandoned the projects while work was in progress leaving buyer to face great losses.
3. Non-adherence to sale agreement
When buyers in the pre-RERA period wanted to withdraw or cancel the agreement they made with an apartment builder because of their slacking pace in construction or due to lack of satisfaction of services, many builders refused to adhere to the sale agreement and its clauses and refrained from refunding the amount invested by the home buyers.
4. Deviations from the original plan
At the time of construction of the apartment or villa, many builders used to violate the sanctioned project plans, deviating from the initial plan and even failed to provide the customers with their Occupancy Certificate and Completion certificates.
5. Obtained illegal permissions
Builders more than often obtained illegal permissions from government controlled bodies to get power, water and other utilities by producing forged documents, that used to put the customer in a difficult place after their 2BHK or 3BHK apartment or villa was handed over.
Real estate deals in Kerala Post-RERA
The real estate sector of Kerala has gone through a drastic makeover after the implementation of the RERA. This has helped to create more equitable and fair transactions between the buyers and developers of apartments and villas, making real estate purchases much more simple, transparent and accountable. RERA has created a pool of buyers who can confidently opt for a 2BHK or 3BHK apartment or luxury villa which is under construction. Let us look at how RERA has instilled in them this confidence.
1. Guaranteed compensation
Even if one of the best builders, fall behind schedule for completing a project, customers with an agreement that follows the RERA template is sure to be compensated. The government can even impose a fine of up to 10% on the builders, if there is a major delay in such cases. There are also effective punishments for errant developers, which can lead to 3 years of imprisonment.
2. Consumer redressal system
RERA puts in place a consumer redressal system in which the customers’ complaints are taken in priority and ensures that the developers provide all amenities for the apartment or villa as promised to the buyers, or will have to risk losing their license.
3. Assured/ compulsory registration
Every real estate project (where the total area to be developed exceeds 500 sq mtrs or more than 8 apartments is proposed to be developed in any phase), must be registered with its respective state’s RERA. Existing projects where the completion certificate (CC) or occupancy certificate (OC) has not been issued are also required to comply with the registration requirements under the Act. This helps assure that the developers and their projects are genuine and follows every criteria of legality stated as per the RERA, so that from when the construction of the apartment or villa begins, the right of the buyers are protected under a registered developer.
4. No pre-launches without approvals
From the many fraudulent practices that exist in the real estate sector, conducting a pre- launch event for a project and having buyers fall prey into it by paying a substantial amount as down payment, will now no longer exist. According to the RERA rules, no pre- launches of real estate projects will be allowed without approvals from the local municipal or development authority and without obtaining registration from the regulator. This empowers buyers to confidently invest in an apartment, villa or home of their choice that has newly been launched.
5. Advance payments at 10%
Section 13 of RERA specifies that no builder shall accept an amount more than 10% of the cost as an advance payment or an application fee without first entering into a written agreement for sale and registration of the sale agreement.This makes flats or villas that are under construction even in prime locations, a viable and cost-effective option for buyers.
6. Economic deals
RERA encourages customers to go ahead with real estate deals involving ongoing projects and this works in the favour of many buyers! Under-construction properties tend to be cheaper than completed, ready to occupy apartments or homes. To be precise, an under- construction property is around 20 to 40 per cent cheaper than a ready-to-occupy apartment or villa. This in turn, also means that buyers can avail home loans on lower EMIs.
With the implementation of the RERA, home buyers can now stop worrying about fraudulent practices that previously were an indispensable part of the real estate sector which included fake sale agreements, unpredictable delays in handing over properties, unscheduled changes in building plans and several other risks, especially with real estate deals that involved properties under construction.
Now, the only thing that the buyer must worry about is,making the right choice of a trusted builder, finding a great location and suitable amenities, while buying an under construction or ready to occupy 2 BHK, 3 BHK apartment or villa. It is also important to ensure that the property for sale which is being considered has been registered under the RERA.
Go on, and never hesitate to buy an upcoming or under construction apartment with a trusted builder like Kalyan Developers, as all our projects are registered with RERA. Choose from a wide range of Kalyan’s upcoming 2 BHK and 3 BHK apartments in Trivandrum, Thrissur, Calicut and Kochi.