CONFIDENCE – The Prior Concern
As per today's scenario, the biggest concern that a customer faces when he decides to buy a property/flat is a lack of confidence. This is due to a series of norm violation cases that occurred in Kerala recently.
As for a customer, it’s their hard-earned money, and they want to have a trustworthy investment. It’s the absolute responsibility of a builder to protect their customer's money while fulfilling their dream of buying a home.
But in reality, a lot of builders in India defaulted their commitment towards their clients. Projects were delayed, and the builders did not deliver the amenities, land area, apartment area as promised. As a result, many customers lost their money.
This is the reason why the Government of India has come up with such a beneficial Act called the Real Estate Regulatory Act (RERA). The Act is aimed to protect the customers’ interest and accountability for builders. In this case, fly-by-night builders will not survive, but good, transparent and genuine builders will be revealed.
Even though the Central Government introduced the RERA Act in 2017, the Kerala State Government introduced this Act only in the last month. Hence this is good news for NRIs and Malayali home buyers. RERA gives you 100% protection of your hard-earned money. This Act will create transparency in selling, buying and all the promises mentioned in the brochures/agreement/Advertisement, etc. From now onwards, all promotional gimmicks will require the approval of RERA.
Be Aware of RERA Benefits (Norms)
Developers/promoters/sellers should register their projects under RERA at the initial stage itself. Ongoing projects like villa, apartment, plots, and commercial buildings must be registered under this rule (more than 8 apartments or 500 sq.m of built-up area).
In Kerala, all the ongoing projects have to be registered within 3 months’ time starting from December 2019. Hopefully, registration might start by December 1st week only (due to administrative processing). Since it is a pan Kerala registration process, we cannot expect that everybody can complete the registration for all the projects within this time frame. It is a mammoth task. Even though if it is not registered, since RERA is in force, the rules are binding on all. Therefore the customer rights are protected and should not matter even if a project is not registered.
- The credibility of the builder
For the existing developers, it is stipulated in the rule that they should provide the ongoing and completed project details, financial capacity, and competency of the builder to convince the RERA authority. This is for establishing the transparency of the builder. Through this, the Government is again clamping the fly-by-night companies. New companies who wish to venture out should also convince their financial capacity and competency. If they fail in any of these, then they will not be eligible to venture out.
- Detailed project description
At the time of registration, the developer must provide all details of the project including the status of the land, characteristics of the land, ownership, approved building plans with approved drawings, all the NOCs, project completion schedule, etc. The RERA authority will once again scrutinize that all these details are genuine. This must be accurate, as this will be taken as legal evidence for any further enquiries or disputes.
- No advertisement/ promotion of the product before registration
No promotional activities should be done before RERA registration of the project. This is to avoid false marketing and fake promises to cheat customers.
Promises/statements or details about the project given through advertisements should be accurate as when compared to the details provided during registration in RERA. Customers can file a complaint about the builder if any mismatch in the promises found. RERA authority can also call for all advertisements randomly and check, and if any mismatch found, the builder will be penalized and blacklisted.
- Standard Calculation for Carpet Area
Earlier, the apartment area was calculated by two methods either by total built-up area or saleable area. This involves much calculation which the majority of clients find difficult to comprehend. RERA focuses on a standardized carpet area, which will be a great advantage for the buyers. Therefore any client can measure the room size and wall thickness to understand their units’ actual carpet area, giving no room for deception. (For example, if the saleable area is 1000 Sq., the carpet area for that will be 750 to 800 Sq. based on the percentage of the common area of the project. So when a builder offers his product for sale, let’s say per sqft. of the saleable area will be Rs. 4000/-. Whereas if they mention the carpet area, the rate specified will be proportionately higher, i.e., Rs. 5000/- per sqft. This shows that there is no difference in either case.)
- Context of Reserve Account
RERA insists on individual accounts for each project of builder for accountability of the particular project and preventing misuse/siphoning of the fund from that project account which is paid by the clients. It also insists that every six months, an audited report of project certified by the chartered accountant and competent engineering surveyors be submitted based on the progress of the construction, for keeping the project healthy. Under any circumstances, the builder cannot withdraw anything more than 30% from that account, and the balance 70% must be spent for that particular project's construction. Therefore the project will not bleed due to the fund shortage.
RERA demands a standard Sale Agreement for all builders – buyers. Proper legal documentation is required with all details and descriptions to avoid further debates or arguments after handing over the project. This will be highly beneficial for customers that they could get good legal support.
The RERA website is user-friendly to customers. As per RERA norms, builders/ promoters should update the progress of the project at each level in the RERA website. A customer could easily go through and follow up on each progress through the website, which ensures transparency at its best.
- Delay in project Completion
In the case of any delay (other than force majeure) in the project completion, (from the stipulated date in agreement), from builder’s part, a customer could either withdraw from the project by demanding the full refund; or continue with the project till it is completed and whatever time delay was there, the client will be compensated by the builder at the rate of SBI Interest rate.
Builder/promoter should specifically mention their Title, Name of the company, project details, warranties that they provide, etc. in the sale agreement. A customer could claim insurance if any irregularities observed in the mentioned details or warranties in the future.
By all means, RERA promises legal support for all the customers who wish to invest their money in the Real Estate sector. It’s the trust and confidence that enables a customer to invest wisely in such an investment option like the Real Estate sector. As RERA came to effect in Kerala, it will be a hassle-free experience for customers to buy their dream home or invest in properties without any doubt.
Till now there was no such controlling authority for the builders so they had taken the clients for a ride with no proper approvals or sanctions. As far as I know, there were a lot of fly-by-night companies who deceived NRI Malayali clients residing in the Gulf countries by showing attractive project plans and flashy brochures. After collecting money, these companies disappeared, leaving their clients high and dry.
Since the RERA is in place now, you need not hesitate anymore to buy your dream home or invest in Real Estate. You can now see the credibility of the builder and their track record and invest your hard-earned money confidently. RERA already made a shield of protection for each client. Under RERA there is an appellate tribunal established which is chaired by a retired judge. Therefore you will get the right to protection without delay.
At Confident Group, we prefer to build homes in accordance with all norms prescribed by such land, building, and Real Estate Acts. It’s our prime concern to keep up the trust and confidence that we provided to our customers for the past several years. By handing over each project, what we extend is the confidence to move ahead and live peacefully!
T A Joseph
MD & Founding Director - Confident Group