RERA: know about the Real Estate Act, RERA may help home buyers to get loan on better terms
Banks would have extra comfort in granting loans to home buyers under the RERA act, which came into force from May 1.
Banks and Financial institutions will have better transparency under the Real Estate (Regulation and Development) Act, home buyers could get their loans sanctioned fast and on better terms.
“After RERA, lenders will be more comfortable in providing home loans to customers. With the new law in place, delay in delivery of the projects due to lack of fund will be reduced drastically which was a major concern among lenders. Now lender will have to deposit funds received from customers in a dedicated project account,” Amitava Mehra, CEO, India Mortgage Guarantee Corporation (IMGC).
Here are few ways in which buyers are likely to be benefited by the RERA Act:
- Under RERA, each state will have to setup regulatory bodies as appellate tribunals to solve the disputes between buyer and builder within 120 days.
- Developer will have to put 70% of the money collected from a buyer in a separate account to meet the construction cost of the project.
- RERA will make it mandatory for all commercial and residential real estate projects where the land is over 500 sq. mt. or eight apartments will have to register with the regulator before launching a project.
- RERA also seeks to impose strict regulations on the promoter and ensure that construction is completed on time.
- Carpet area has been clearly defined in the bill to include usable spaces like kitchen and toilets imparting clarity which was not the case earlier.
- A developer’s liability to repair structural defects has been increased to 5 years from the earlier 2 years.
- The buyer will pay only for the carpet area (area within walls). The builder can’t charge for the super built-up area, as is the practice at present.
- Developers will be able to sell projects only after the necessary clearances. Under RERA, builders and agents will have to register themselves with the regulator and get all projects with more than eight apartments registered before launch.
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Under RERA, 70 per cent of money collected from home buyers will be deposited in a separate account which is to cover costs of the construction insuring that funds don’t run out due to diversion to other projects.
The state governments are presently in the process of setting up their real estate regulatory bodies after notifying the respective rules under RERA. The full impact and implications of the new law will be clear in the coming months.