Having a property in your home country might be ordinary for the people residing there but for the ones who are abroad, a property is much more than just money. It holds emotional value as ties to the home country is strengthened through property investments. And, even if we were to remove the ‘emotions’ out of the property investments, still a property investment involves your hard-earned money and you need to be very careful about it, especially when you are a thousand miles away.
Nothing is worse than the feeling of being cheated when it comes to investing in a property.
Unlike local residents, it is not feasible for the NRIs to visit the property site frequently. They have to trust the developers, brokers, friends and in some cases families in India. Some NRI’s face the worse when it comes to property investments because of a handful of fraudsters.
The above to an extent is also true for local residents. Some are not fully aware of the laws/rights as well as maybe they are first time buyers. They simply do not have enough knowledge to safeguard their interests from developers or brokers who can take them for a ride.
To find a solution to such issues related to property, for residents and even NRIs, Real Estate Regulation and Development Act (RERA) was introduced in India.
RERA was passed as an act in the year 2016 to protect home-buyers and also to boost investments in the real estate industry.
The Act came into force on May 1, 2016, with 59 of 92 sections notified. The remaining provisions, however, came into force on May 1, 2017.
So how does RERA affect property investment decisions of NRI investors?
In order to answer this question, first, we’ll need to understand some of the main provisions of this act.
Overview of Important Provisions of RERA
According to the act, every state and Union territory of India must have its own regulator and set of rules in order to govern the functioning of the regulator.
In addition to this, a regulator of the state will be responsible to register real estate projects and real estate agents operating in their state under RERA. The details of all registered projects will be put up on a website which can be accessed by the public. [source]
Here are some of the key provisions of RERA:
- The promoter of a real estate development firm needs to maintain a separate escrow account for each of his projects. Also, a minimum of 70 per cent of the money from investors and buyers will have to be deposited. The only reason that this money can be used for is the construction of the project and the cost borne towards the land.
- For the buyers to have more clarity, the developers will have to keep the buyers informed of their other ongoing projects.
- RERA also requires builders to submit the originally approved plans for their ongoing projects and the alterations that they have made later to increase the satisfaction level of the buyers. In addition to this, the builders have to furnish details of revenue collected from allottees, the timeline for construction, how the funds were utilised, completion, and delivery that will need to be certified by an Engineer/Architect/ practising Chartered Accountant.
- The construction quality is also kept in check by the act which instructs buyers to ensure protection to buyers about the same. From the date of possession, till five years, the buyers will be ensured of construction quality. If there is any issue in regard to construction in these five years, it is the regulator’s responsibility to have the issue rectified within 30 days.
- Also, developers are forbidden to invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority. And even after registration, all the advertisement inviting investment will have to bear the unique RERA registration number. The registration no. will be provided project-wise.
- After the project is registered, developers need to furnish details of their financial statements, legal title deed and supporting documents.
- Buyers are given further security as RERA has made compulsory that developers can’t ask more than 10 per cent of the property’s cost as an advanced payment booking amount before actually signing a registered sale agreement.
- The regulator will also have the power to fine and imprison errant builders based on a case by case basis. The duration of this imprisonment can go up to a period of three years for a project.
RERA – Good for Residents, Great for NRIs!
Considering the provisions of RERA, it can be said, that while residents are safeguarded against fraudulent practices, builders taking their money for a ride, with either delayed possessions, poor quality of construction, etc. – the NRIs too will be in a lot better position to invest in property in India. This is because the process will be more transparent along with all the provisions offered to them.
Property investment is a matter which needs to be carefully thought of. With RERA coming into play, most problems that NRI’s face with respect to purchasing the property has been addressed.
Since RERA requires regular construction updates, this problem of an NRI not being able to keep a tab on the progress of an under-construction property is solved.
Also, since all the information will be made available on the developer’s website, an NRI can get any information he wants through the internet. This has led to an elevated confidence in the property investment and also reduces the chances of misleading marketing campaigns.
The Real Estate Regulation and Development Act has solved major issues NRI’s had with respect to investing in India. Issues of lack of transparency, delays in project execution, irregular or no updates from builders regarding the project, misleading marketing and the absence of a legal route to catch a fraud builder have been addressed.
However, there are still certain aspects of Property Investment in India that an NRI may not be able to completely take care of.
RERA safeguards, their interests as far as buying the property is concerned, but for managing a purchased property still has its fair share of challenges for an NRI. This is where a Property Management service, which is reliable and trustworthy to take care of everything in a transparent and hassle-free manner, giving you as an NRI investor, complete peace of mind.
Looking for such property management service? Get in touch with us – TODAY!