What is RERA?
RERA is The Indian Real Estate (Regulation and Development) Act, passed in 2016. The act saw the establishment of an Indian Real Estate Regulatory Authority in each Indian state to act as a regulatory body for the Indian real estate sector with the intention of protecting the rights of home buyers as well as to encourage investment in the Indian housing industry. Although a few sections of the Act were available from May 1st,2016, the act came into full force only on May 1st, 2017.
Before RERA vs. After RERA:
The primary objective of RERA is to protect the interests of people looking to buy property in India and to promote the overall development of the sector.
Before RERA, the Indian housing industry was largely unregulated and extremely inefficient. Home buyers were routinely swindled by estate agents and builders, with no means of having their grievances heard or a means to seek redressal. The process was also often fraught with delays which led to home buyers suffering financially. In some cases, people who took out a home loan on their under-construction property ended up paying interest on their home loan, in addition, to rent on their current property.
The Act offers home buyers protection by imposing strict rules and regulations for builders and developers. It is hoped that RERA will bring some much-needed transparency and fairness to the Indian housing industry and also ensure accountability.
Some of the benefits under RERA include:
- 1. Compulsory registration of all new and current projects.
- 2. Standardisation of the definition of “carpet area”.
- 3. Increased rights for buyers in the event of delays, defects and false promises.
- 4. Reduced risk of builder insolvency.
- 5. Established authority to address grievances.
What does this mean for NRIs?
RERA has come at a favourable time, as due to demonetisation, house prices have fallen resulting in lower interest rates on Indian home loans. The falling Indian Rupee against most major foreign currencies and the simplified regulations for NRIs under the Foreign Exchange Management Act (FEMA) have also helped to make it convenient to invest in the Indian housing market.
For NRIs buying into the Indian property market, some of the main concerns have been the lack of transparency in dealings, lack of progress information, delays in completion and no access to a grievance redressal system. In Spite of the housing market in India being an attractive investment opportunity for NRIs, the entire process has proven to be unduly stressful.
RERA’s promise of greater protection and transparency should provide greater incentive as well as bring greater peace of mind.
Ready to dive into the Indian housing market? See our NRI Home Loans comparison table.
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